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Abstract

This paper examines the short run sensitivity of willingness to pay (WTP) estimates for groundwater quality and quantity in the presence of external shocks, using data from two choice experiments implemented in Zagreb, Croatia. To assess the sensitivity of WTP estimates we take advantage of a sudden deterioration in political stability, expressed by a series of public protests that took place in the city during the data collection and compare mean WTP estimates before and during the protests. We find that mean WTP for groundwater quality and quantity is sensitive to the occurrence of the protest. The result indicates that events unrelated to environmental quality and especially political instability can influence the valuation of environmental goods. We interpret the result as an indication that the choice experiment method is sensitive enough to capture changes in WTP that are a result of sudden changes in the state of the world.

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