A Review of WTA/WTP Studies

Willingness to accept (WTA) is usually substantially higher than willingness to pay (WTP). These constructs have been studied for roughly 30 years and with a wide variety of goods. This paper reviews those studies. We find that the less the good is like an “ordinary market good,” the higher is the ratio. The ratio is highest for non-market goods, next highest for ordinary private goods, and lowest for experiments involving forms of money. A generalization of this pattern holds even when we account for differences in survey design: ordinary goods have lower ratios than non-ordinary ones. We also find that ratios in real experiments are not significantly different from hypothetical experiments and that incentive-compatible elicitation yields higher ratios.     

A laboratory study of auctions for reducing non-point source pollution

Non-point source pollution, such as nutrient runoff to waterways from agricultural production, is an environmental problem that typically involves asymmetric information. Land use changes to reduce pollution incur opportunity costs that are privately known to landholders, but these changes provide environmental benefits that may be more accurately estimated by regulators. This paper reports a testbed laboratory experiment in which landholder/sellers in sealed-offer auctions compete to obtain part of a fixed budget allocated by the regulator to subsidize abatement. In one treatment the regulator reveals to landholders the environmental benefits estimated for their projects, and in another treatment the regulator conceals the potential projects’ “environmental quality.” The results show that sellers’ offers misrepresent their costs more for high-quality projects when quality is revealed, so total abatement is lower and seller profits are higher when landholders know their projects’ environmental benefits. This suggests that concealing this information may improve regulatory efficiency.     

The Relationship between the Income Elasticities of Demand and Willingness to Pay

The relationship between income and willingness to pay for collectively provided public/environmental goods is investigated. We show that while the income elasticity of willingness to pay and the ordinary income elasticity of demand are related, knowledge of one is insufficient to determine the magnitude or even the sign of the other. The income elasticity of willingness to pay is influenced by additional factors which are generally unobservable. Examples are provided to illustrate the degree to which the two income elasticities may diverge. Our results indicate that even when goods are demand luxuries they may or may not have income elasticities of willingness to pay which are greater than one.     

Pollution Permits and Sustainable Growth in a Schumpeterian Model

In Chapter 4 of their book (“Endogenous Growth Theory,” MIT Press, Cambridge, MA (1998)), Aghion and Howitt introduce environmental pollution in an aggregate Schumpeterian model and characterize the optimal path. In this paper, we study the equilibria in a decentralized economy compatible with their model. First, we study the trade-off between environmental quality and growth and identify the channels of transmission of environmental policy into growth performance. Then, we compute the levels of the tools which are used to implement the optimum.     

A criterion validity test of the contingent valuation method: comparing hypothetical and actual voting behavior for a public referendum

This study pursues external validation of contingent valuation by comparing survey results with the voting outcome of a Corvallis, Oregon, referendum to fund a riverfront improvement project through increased property taxes. Survey respondents hypothetically make a voting decision—with no financial consequences—on the upcoming referendum. The survey sample consists of respondents verified to have voted in the election. We use available precinct-level election data to compare the proportion of “yes” survey and referendum votes as well as estimate voting models and mean willingness to pay (WTP) based on the two sets of data. We find that survey responses match the actual voting outcome and WTP estimates based on the two are not statistically different. Contrary to similar studies, our statistical results do not depend on re-coding the majority of “undecided” survey responses to “no.” Furthermore, such a re-coding of responses may be inappropriate for our data set.     

Hedonic housing prices and the demand for clean air

This paper investigates the methodological problems associated with the use of housing market data to measure the willingness to pay for clean air. With the use of a hedonic housing price model and data for the Boston metropolitan area, quantitative estimates of the willingness to pay for air quality improvements are generated. Marginal air pollution damages (as revealed in the housing market) are found to increase with the level of air pollution and with household income. The results are relatively sensitive to the specification of the hedonic housing price equation, but insensitive to the specification of the air quality demand equation.     

Valuing nature in a general equilibrium

We explore the consequences of modeling the demand for environmental quality improvements as a fully integrated part of a general equilibrium demand system in an applied general equilibrium (or CGE) analysis. Demand for non-market goods depends on a full range of relative prices as well as environmental outcomes. We simulate the effects of reducing two air pollutants to improve human health and three ecosystem services provided to households. The ecosystem services make non-separable contributions to household utility. We find that willingness to pay measures of use-based ecosystem services are impacted by changes in demand for complementary market goods. Demand for these goods shifts due to pollution reductions that enhance ecosystem services. Partial equilibrium estimates of these use values can be measured with substantial error if they fail to account for the general equilibrium adjustments caused by pollution. Over 300 calibrations of the model identify the model features important to these errors. We find that effects on ecosystem services associated with non-use values have important implications for the feedback effects on use related measures of economic tradeoffs. This is due to how our model integrates market and non-market effects, reflecting the non-market services importance to general equilibrium market outcomes.     

A note on the willingness to pay approach to the valuation of longevity

A modification of Freeman's model of willingness to pay for reduction of environmental risk to life is presented. Rather than treating work-related, consumption-related, and exogenous hazards as additive components of an overall level of safety, the revised model acknowledges the interdependence of these components. The results derived from this approach imply that (a) willingness to pay for a marginal reduction in risk depends upon the individual's initial level of utility; and (b) willingness to pay for a reduction in a given component of safety is related to the level of each component risk. The results of the revised model become more dramatic at higher levels of risk.     

改善天津市大气环境质量的研究：以南开区实例剖析

文章结合南开区实际情况 ,对天津市大气环境质量现状进行了系统分析 ,详细论述大气污染造成的危害及导致大气污染的原因。从解决煤烟型污染、防止道路施工扬尘、解决风沙尘的侵袭和控制汽车尾气污染四个方面 ,针对性地提出改善天津市大气环境质量的污染防治对策。     

Strategic environmental policy; eco-dumping or a green strategy?

The Porter hypothesis claims that a strong environmental policy best serves the interests of a nation's export industry. While this hypothesis seems to be based on some form of bounded rationality, this paper argues that governments may have good reasons for setting an especially strong environmental policy even though firms are fully rational. If the available abatement technology turns the environment into an “inferior input”, competitiveness is spurred by a strong environmental policy. The government should take advantage of this, and set an especially strict emission quota or an especially high emission tax. The findings in the paper also has consequences for the desirability of international cooperation with respect to national environmental policy. If a strict environmental policy spurs competitiveness, the environment is better protected without cooperation.     

Values and willingness-to-pay for sustainability-certified mobile phones

ABSTRACT

This study investigated whether endorsement of personal values is associated with willingness to pay more for mobile phones with an environmental or social sustainability label. Participants were students in Sweden, Norway and Germany. A self-report inventory was used to measure willingness to pay and the importance attached to values of Schwartz’s circular model. In Sweden and Norway, participants were willing to pay, on average, 18% extra for a mobile phone with labels for environmental or social sustainability. In Germany, the corresponding share was 12%. To strive for self-enhancement values, that is, social status and prestige, as well as control and dominance over people and resources, was associated with a lower willingness to pay for mobile phones with labels for environmental or social sustainability in all three countries. Furthermore, women were willing to pay more than men for mobile phones with both kinds of sustainability labels. In Sweden and Norway, participants were, on average, willing to pay more for a mobile phone with a label for social sustainability compared to a mobile phone with a label for environmental sustainability.     

Strategy for the Control of Land-Based Sources of Marine Pollution in the Wider Caribbean Region

The pollution of the marine environment caused by land-based sources threatens or impairs the health of the ecosystems and the value of human uses of the coastal waters. the Contracting Parties to the Convention for the Protection and Development of the Marine Environment of the Wider Caribbean Region agreed to take all appropriate measures to prevent, reduce and control pollution. in the first meeting of the Contracting Parties, the development of a protocol on the control of marine pollution from land-based sources was recommended as a measure to protect the marine environment.

A small group of experts from the Caribbean Region formulated a strategy for controlling land-based sources of marine pollution. Due to the diverse nature, resources and capabilities of the countries comprising the Region, the pollution control strategy suggested by the group of experts included the following techniques or their most appropriate combination: (1) pollution prevention measures, (2) effluent limitations, (3) water quality limitations, (4) environmental planning, and (5) best management practices. the desirable control strategy should be based on a system of discharge permits in the case of point source pollution, which includes effluent and water quality limitations. the technology based effluent limitations could be applied as a short-range strategy to control pollution from industrial and domestic point source discharges. the use of water quality standards could become part of a long-range strategy for controlling point sources. for nonpoint sources, it would be virtually impossible to develop effluent limitations. Thus, the implementation of best management practices and effective environmental planning would be the most reasonable control strategy for non-point sources. However, pollution prevention measures could consist of a “black list” of substances that should be completely banned, and a “grey list” for those that should be strictly limited. These lists should be adopted or appropriately modified for the conditions of the Wider Caribbean Region.

The development of control based on the water quality of the receiving body of water involves the collection and analysis of effluent and ambient data to develop water quality based permit limits and to assess compliance with these permits. Finally, any marine pollution control strategy developed by the countries of the Region should be mutually agreed upon and implemented within a period of ten years from the ratification of a protocol on land-based sources of marine pollution.     

Saturday effects in tanker oil spills

This paper documents a “Saturday effect” in the timing of tanker oil spills—certain types of spills happen much more frequently on this day than one would expect if the spills were uniformly distributed. The phenomenon is restricted to Europe and North America, and is associated with “vessel guidance” accidents—groundings, collisions, and rammings. Eliminating the Saturday effect would reduce tanker oil spills by around 163,000 gallons per year. Several policy responses are considered, including a Saturday harbor tax. A lower bound for an efficient tax is estimated to be $780 for a 20 million gal cargo.     

Parental altruism and the value of avoiding acute illness: are kids worth more than parents?

A model describing parents’ preferences to relieve their own and their children's acute illnesses is estimated using stated-preference data. Estimated marginal rates of substitution (MRS) between child and parent illness are about two, indicating that parents value children's illness attributes twice as highly as their own. The MRS is larger for younger children, falls toward unity as the child approaches adulthood, and appears to reflect parental altruism rather than parent–child differences in initial health or illness costs. Intra-family allocations may compensate for chronic health impairments. Parents’ willingness to pay to avoid own or child illness increases with income, declines with fertility, increases at a decreasing rate with duration and number of symptoms, and depends on perceived discomfort and activity restrictions. Current methods of assessing morbidity benefits of environmental regulations may understate substantially the value of children's health, particularly in African-American families.     

A note on the use of property values in estimating marginal willingness to pay for environmental quality

The principle purpose of this paper is to discuss the theoretical background of the use of property values in estimating damage function. In the first part of the paper a general equilibrium model is constructed in which environmental quality differences are capitalized into land rents. In the second part of the paper some of the assumptions needed for this result are scrutinized, and it is found that they are hardly realistic. The main conclusion is, thus, that the study of property values cannot give viable estimates of the marginal willingness to pay for environmental quality.     

Eco-hydrological modelling in a highly regulated lowland catchment to find measures for improving water quality

Water quality modelling in the meso-scale Rhin catchment in the German federal state Brandenburg was done (1) to answer some specific questions concerning identification of point and diffuse sources of nutrient pollution in the catchment, (2) to assess the influences of possible climate and land use changes on water quantity and quality and (3) to evaluate potential measures to be done in order to achieve a “good ecological status” of the river and its lakes as required by the Water Framework Directive (WFD).The Rhin catchment is a typical highly regulated lowland river basin in Northern Germany. The regulations complicate water quantity and quality modelling in the catchment. The research was done by using the eco-hydrological model SWIM (Soil and Water Integrated Model), which simulates water and nutrient fluxes in soil and vegetation, as well as transport of water and nutrients to and within the river network. The modelling period was from 1981 until 2005. After calibrating the hydrological processes at different gauges within the basin with satisfactory results, water quality (nitrogen and phosphorus) modelling was done taking into account the emissions of different point sources (sewage treatment plants, etc.) and identifying the amount of diffuse pollution caused mainly by agriculture.For suggesting some feasible measures to improve water quality and to reduce diffuse pollution considering possible climate and land use changes, different reasonable scenarios were applied in consultation with the Environmental Agency of Brandenburg (LUA). The study revealed that the amount of water discharge has significant influence on the concentration of nutrients in the river network, and that nitrogen pollution, caused mainly by diffuse sources, could be notably reduced by application of agricultural measures, whereas the pollution by phosphorus could be diminished most effectively by the reduction of point source emissions.     

Knowledge and Perceptions in Costa Rica Regarding Environment, Population, and Biodiversity Issues

Public understanding of general environment- and population-related issues is critical for successful conservation efforts. We interviewed 300 residents of Costa Rica, distributed among three socioeconomic groups, to survey knowledge and perceptions about the environment. We focused on Costa Rica because it is an international model for sustainable development and because of its direct economic interest in biodiversity preservation for ecotourism. Our results indicate that Costa Ricans generally have a limited awareness of environment- and population-related problems. In all socioeconomic groups environmental problems were considered less important than various other problems, but 91% of respondents indicated a willingness to pay more for water or electricity if the extra money were used to protect biodiversity. Residents of San Jose's lower-class neighborhoods more strongly perceived the effects of population growth and environmental degradation than did residents of urban, upper-class, or rural neighborhoods. Of those interviewed, 69% thought the rate of population growth should decrease. Only 52% of those surveyed, however, perceived any link between population size or growth rate and environmental quality; of those, 33% could not describe the link. Our findings and others suggest a number of ways to enhance the effectiveness of environmental education programs worldwide: (1) include information on the relationship between population and environmental quality; (2) explain the socioeconomic implications of environmental degradation; (3) in addition to formal education, utilize the mass media more; (4) tailor messages to local circumstances.     

Willingness to Pay for Quality Improvements: Should Revealed and Stated Preference Data Be Combined?

In this article we propose theoretically consistent welfare measurement of use and nonuse values for an improvement in environmental quality with revealed and stated preference data. An analytical model based on the comparative static analysis of the variation function that describes the relationship between recreation demand and dichotomous choice contingent valuation models is estimated. Our results show that revealed and stated data should not be combined under the same assumed preference structure unless the two decisions imply the same change in behavior induced by the quality change. In addition, our results indicate scope effects in willingness to pay measures estimated with stated preference data.     

Modeling changes in the coastal ecosystem of the Pearl River Estuary from 1981 to 1998

The coastal ecosystem of the Pearl River Estuary (PRE) has been overfished and received a high level of combined pollution since the 1980s. Ecopath with Ecosim was used to construct two ecosystem models (for 1981 and 1998) to characterize the food web structure and functioning of the ecosystem. Pedigree work and simple sensitivity analysis were carried out to evaluate the quality of data and the uncertainty of the models. The two models seem reliable with regards to input data of good quality. Comparing the variations of outputs of these two models aimed to facilitate assessment of changes of the ecosystem during the past two decades.The trophic structure of the ecosystem has changed with an increase in the biomass proportion of lower trophic level (TL) organisms and a decrease in top predator biomass proportion. All the indices of ecosystem maturity examined show that the system was in a more mature condition in 1981 than in 1998, although the system has been in a condition of stress due to anthropogenic disturbances, such as environmental pollution and habitat destruction since 1981. The ecosystem was aggregated into six and seven integral TLs in 1981 and 1998, respectively, using the trophic aggregation routine of Ecopath. Most of the total system biomass and catch took place at TL II and III in both years. But the distribution of the total system biomass and catch at different TLs changed with decreasing proportions in higher TLs in 1998. The mean transfer efficiency was 9.1% and 10.2% in 1981 and 1998, respectively.Comparative network analysis allowed quantification of the importance of direct and indirect trophic interactions among functional groups. Moreover, a method derived from the mixed trophic impact (MTI) analysis allowed estimating importance of groups in terms of “keystoneness” and identifying the keystone species in the two models over the past two decades. The results indicate that there were no clear keystone species in 1998 but two keystone species at medium trophic levels were identified in 1981. Moreover, organisms located at low trophic levels such as phytoplankton, zooplankton and benthic invertebrates were identified to have relatively high keystoneness in the ecosystem.     

The distribution of benefits from improvements in urban air quality

This paper analyzes the distribution of benefits from an air pollution control strategy for the Boston metropolitan area. Average benefits to seven income groups are measured by physical improvements in air quality and by dollar values, using housing value and health damage approaches to estimate willingness to pay. Benefits include those in the work environment as well as at home. Physical benefits at home are found to be greater for the poor rather than for the rich; when measured in monetary terms with workplace benefits included, however, the distribution is much less pro-poor.