He Tangata: It Is People

Quantifying the benefits humans derive from ecosystem services is important if they are to be taken into account in the current political climate. Such valuation provides an appreciation of the magnitude of the scale of the benefits derived by humans and recognition of the importance of protecting the “non-market” and intrinsic goods and services ecosystems provide. While there has been some progress, value is still mostly defined by Gross Domestic Product, with a narrow focus on the “market” and economic activity. The good news is that technology now allows people to increasingly take matters into their own hands, such as the example of crowdfunding the purchase of a beach at Awaroa to add to the conservation estate in New Zealand. This type of crowdfunded project is one option for pushing governments to respond to the public’s desire to protect ecosystems for posterity.

The trade-off between economic growth and environmental protection is generally determined using economic tools such as cost–benefit analysis. This requires placing a monetary value on non-market ecosystem goods and services. A commonly used method for estimation is Contingent Value, or CV. Surveys of individual respondents are used to estimate what people are willing to pay for specified changes in the quantity or quality of goods, or what they would be willing to accept in compensation for well-specified degradations in the provision of these goods.^1,2 The former assumes that ecosystem services are not owned by the citizenry, who must instead pay for them. The latter assumes that the citizenry does own them and must be compensated for their loss.

Survey respondents nominate a bid amount they would be willing to pay in any given time period. To ensure realistic valuations, CV places importance on who pays and how funding is generated and administered. Respondents have to consider their income and other financial commitments (budget constraints), the benefits they could derive, alternative sites that may exist (substitution), and discuss their answers amongst other household members if the survey is household-based. Demographic information about respondents is sourced as part of the survey. A benefit of the CV method is that it allows respondents to learn about the issue at hand.

The weaknesses of CV are well documented.^3–6 The first major debate that arises with CV is the conceptual use of a hypothetical situation that does not involve real market transactions or decisions. As a result, strategic overbidding can occur as there is no actual binding payment for the provision of the goods. The hypothetical situation can also be problematic when people have no experience valuing non-use benefits and public goods, so there is a lack of understanding as to what respondents are being asked to value. It is also possible for information bias when the hypothetical situation is misrepresented or incomplete (especially when trying not to make the survey too complex), or value cues are inadvertently suggested.

The CV technique is an expensive and time-consuming technical process. When carrying out a CV, there is scope for multiple sources of error to be introduced into the process. The risk of the sample population being unrepresentative is high as CV response rates are typically low. Non-response bias occurs when non-respondents’ preferences differ significantly from those of respondents; self-selection bias occurs if only the respondents to whom the issue is of importance reply to surveys. This data extrapolated across the entire population can result in an over or underestimation. How to deal with zero bids is also an issue with CV studies. The majority of studies discard them as protest bids, but if included, the overall value can be significantly reduced.

Bias can also stem from interview bias; anchoring and starting point bias, which influences bids; strategic bias, where respondents intentionally overstate or understate their willingness to pay in an attempt to influence the outcome or results in their favor; yea-saying, where people don’t really consider the hypothetical scenario presented and instead fill in the surveys without thought, but rather to get them out of way quickly; scope and embedding effects; and payment vehicle bias, where, as an example, the cost is added to utility accounts and the respondent does not pay any utility accounts. Value estimates using CV are controversial and the reliability of the non-use values estimated is disputed when used for litigation purposes and natural resource damage assessment.

Digital technology can overcome many of the problematic issues associated with CV by providing a direct means by which people use their own money to express preference. When people vote for a government, their decision is generally based on the broader political ideals they represent rather than a targeted policy (e.g., ecosystem services protection). Digital technology provides a viable and democratic alternative that allows people to have a direct say and more influence in a specific policy area. Platforms such as crowdfunding provide opportunity for a new type of public decision-making and governance. With crowdfunding, people voluntarily support a targeted project or cause, promoted online and/or in the media, by giving a donation or pledge. Donations are either collected after a set period of time or, alternatively, a target amount can be set, and unless the amount is reached by a given date, no payment is required.

A recent New Zealand example demonstrates how crowdfunding can provide a way for the public to get directly involved in expressing the value they put on ecosystem services. A spit of land and beach at Awaroa, located next to the Abel Tasman National Park, was up for sale, with offers starting from NZ$2 million. The seven-hectare strip is strategically located, filling a gap in the continuity of the park. It also has riparian rights giving legal title to the water’s edge and, therefore, an owner has the power to prevent people landing a boat or walking across the beach. The Abel Tasman National Park is very popular with New Zealanders and tourists due to its accessibility and natural beauty, including clear, warm water and white sands. The spit is a nesting place for sea birds and the shifting sands provide a natural defense for the coastline. When the government was asked to purchase the land to add to the conservation estate, the response was that the biodiversity of the land was not sufficiently unique to use tax-payer money. Rather than seeing public access to the spit lost permanently, two brothers-in-law (after a Christmas day barbecue discussion on what a tragedy this would be) instigated a crowdfunding campaign to buy the land on behalf of all New Zealanders.

The campaign galvanised New Zealanders (and some overseas people) of all ages to action. Over a 22-day period, 39,249 donations were made and a total of NZ$2,278,171 pledged. Figure 1 shows the accumulated pledges made from the start of the campaign on January 22 to its end on February 15, 2016.

The most widely held view expressed for why people were donating to the campaign was that the inlet was a precious asset that should be protected for both current and future generations to enjoy. Some of the donors were regular visitors who enjoy the area and want others to also be able to do so. Others accepted they won’t ever go there but wanted their children and grandchildren to have the option to do so. There was a strongly held view that beach access should not be just for the rich (often foreigners), but for all New Zealanders and future generations. The rate at which land in New Zealand is being sold off, coastal land subdivided, and access restricted was a common concern. Such actions were considered as denying people their heritage. Other reasons given for supporting the campaign included the following: the sense of control over ownership of a small part of country it gave; it provides a way to show the collective love of the beautiful and unique country and care about the environment; the sense of independence that being able to take personal action provides; it was a positive story about making a difference for the future and greater good of the nation; it showed the collective commons at work, and that everyone giving a little can make a difference; and the campaign provided a space for like-minded people to come together.

Crowdfunding is an empowering form of valuation that gives all people an equal voice. Most donations were small. Many donors wished they could contribute more, but said it was all they could afford. There were 345 donations of NZ$1, more than half (52 percent) of the donations were for NZ$20 or less, and 95 percent were NZ$100 or less. With crowdfunding, it can be argued that value is determined by the number of people willing to contribute as well as the amount collected.

The crowdfunding action brought the sale of the beach to the attention of the country and communicated a strong message to the government about the value New Zealanders place on their unique environment. The level of public support for the campaign (there were more than 39,249 donors as many donations were made on behalf of families, workplaces, groups of friends, and schools) resulted in pressure on the government, who made a last minute U-turn and contributed NZ$350,000. This was enough to clinch the sale.

As a democratic process, the campaign was empowering, and proved that the power of the public is an independent force. It gave ordinary people a voice on a matter of national significance and demonstrated that the average citizen can act in a collective way to express how they value their environment. The campaign built on a sense of ownership as a nation rather than individual property rights and brought New Zealanders together (with a few people from overseas) to do something positive and achieve an outcome that could not be accomplished individually. While many donors expressed disappointment in the government’s lack of commitment to conservation, this was not considered a sufficient reason by those who participated to not act.

One of the big questions about CV is whether it has any relation to what people would actually pay. Past investigations indicate CV respondents overstate their intention to pay.⁷ The 99.15 percent collection rate on pledges to the Awaroa campaign shows what people are actually willing to pay to preserve their ecosystems and way of life—both of which are precious and difficult to replace if lost. Simply through the koha (gifting) of money, a priceless taonga (treasure) has been retained as a common asset for all current and future New Zealanders.

Many donors expressed the view that they would always feel that this is their beach, as they contributed to saving it from development. Others were keen for the crowdfunding campaign to be a precedent and inspiration for other similar ventures, some of which have already followed suit. For example, one campaign raised NZ$1.25 million to protect and keep public a 37-hectare forested block in Auckland’s Bethells Valley that is home to many rare wetland species.⁸ While there is a risk that crowdfunding for the environment may suffer from fatigue over time, there is an equal chance it may continue to appeal to the many people who want to pass on a heritage to future generations but are not wealthy enough to make philanthropic endowments on their own account.

Public involvement can be difficult to manage for a number of reasons. Regardless of incentives, publicity, and effort, many citizens are excluded. With this crowdfunding campaign, older people were disadvantaged as no provision was initially made for people who wanted to make a donation by non-electronic means.

Transparency is required and especially important for nonprofits.⁹ The mass media played a critical role in raising awareness and getting people behind the campaign. At the same time, media attention has its downside and can result in value distortion. The Awaroa crowdfunding campaign resulted in over 100 private buyers expressing an interest in a property that had been on the market for more than two years. With the Awaroa campaign, after NZ$2 million was reached, public updates on the amount raised were not published.

Ideally it would have been good to be able to compare the crowdsourced valuation with a CV survey for either Awaroa or a similar location elsewhere in New Zealand. How to extrapolate across the entire population for ecosystem valuation when using crowdfunding requires further research. It cannot be assumed that not making a donation means that individuals place no value on the ecosystem in question. This outcome could be due to any number of different factors including things like being unaware of the crowdfunding campaign, not having access to or being confident with online technology, people feeling they have already paid via taxes and therefore unwilling to pay more, or people knowing they cannot be excluded having no incentive to contribute voluntarily (the free rider problem). There has been a concerted effort to overcome the weaknesses of CV.^10,11 Incorporating crowdfunding data may provide new possibilities if CV continues to be used.

Final Thoughts

Crowdfunding is a transparent process that allows expression of values as well as knowledge transfer in a process that builds trust, accountability, and legitimacy. A broad understanding can be constructed of not just ecological functions and services but also the property rights, institutional arrangements, fairness criteria, and what people care about.

The Awaroa crowdfunding campaign indicated that government priorities do not always align with the values of a large proportion of citizens. Crowdfunding was implemented to protect unique ecosystem services for the benefit of all New Zealanders. In this instance, public expression, backed up by a willingness of the donors to spend their own money, resulted in the government changing its position.

Digital technology enhances the scope for direct democracy. Crowdfunding shows that people like having an impact on decisions and forges a way towards participatory budgeting where people have a direct say in how taxes are spent.¹² Such empowerment might encourage people to engage more with democracy and reverse the present worldwide trend of political disillusionment and low voter turnout.

In the words of the Awaroa campaigners: “He tangata, he tangata, he tangata (it is people, it is people, it is people). The more we act with initiative as people, the better government we will get.”¹³

References

1. Carson, RT et al. Contingent valuation and lost passive use: damages from the Exxon Valdez oil spill. Environmental and Resource Economics 25(3), 257–286 (2003).
2. Bateman, IJ et al. Economic Valuation with Stated Preference Techniques: A Manual (Edward Elgar, Cheltenham UK, 2002).
3. Diamond, PA & Hausman, JA. Contingent valuation – is some number better than no number. Journal of Economic Perspectives 8(4), 45–64 (1994).
4. Cummings, RG & Harrison, GW. The measurement and decomposition of nonuse values: a critical review. Environmental and Resource Economics 5(3), 225–247 (1995).
5. Arrow, K et al. Report of the NOAA panel on contingent valuation. Federal Register 58(10), 4601–4614 (1993).
6. Birol, E, Karousakis, K & Koundouri, P. Using economic valuation techniques to inform water resources management: a survey and critical appraisal of available techniques and an application. Science of the Total Environment 365(1-3), 105–122 (2006).
7. Christie, M. An examination of the disparity between hypothetical and actual willingness to pay using the contingent valuation method: the case of Red Kite Conservation in the United Kingdom. Canadian Journal of Agricultural Economics 55(2), 159–169 (2007).
8. Matuku Link. Givealittle [online] (2016). https://givealittle.co.nz/project/matukulink.
9. Gleasure, R. & Feller, J. Does heart or head rule donor behaviors in charitable crowdfunding markets? International Journal of Electronic Commerce 20(4), 499–524 (2016).
10. Morrison, M & Brown, TC. Testing the effectiveness of certainty scales, cheap talk, and dissonance-minimization in reducing hypothetical bias in contingent valuation studies. Environmental and Resource Economics 44(3), 307–326 (2009).
11. Carson, R. Contingent valuation: a practical alternative when prices aren’t available. Journal of Economic Perspectives 26(4), 27–42 [online] (2012). http://econweb.ucsd.edu/~rcarson/papers/Carson_JEP12.pdf.
12. Dias, N. Hope for democracy – 25 years of participatory budgeting worldwide. Democracy Spot [online] (2014). https://democracyspot.net/2014/06/10/new-book-on-25-years-of-participatory-budgeting/.
13. Abel Tasman Beach Crowdfunding Campaign. Givealittle [online] (2016). https://givealittle.co.nz/project/abeltasmanbeach2016/updates.