Valuing damage to historic buildings using a contingent market: a case study of road traffic externalities

Pricing of road transport at social marginal cost should make users aware of the cost of damaging the environment (external costs). Such an approach, however, requires a monetary estimate of this damage which can be difficult to derive. On the basis of a study carried out at Neuchâtel (Switzerland), the contingent valuation method was used to estimate the damage caused to buildings of historical and cultural value by traffic‐caused air pollution. In a survey, individuals were asked to contribute to a fund set up to finance the maintenance of pre‐selected historic buildings. A valuation function to predict willingness‐to‐pay responses is estimated.     

Using a choice experiment to measure the environmental costs of air pollution impacts in Seoul

Air pollution, a by-product of economic growth, has been incurring extensive environmental costs in Seoul, Korea. Unfortunately, air pollution impacts are not treated as a commercial item, and thus it is difficult to measure the environmental costs arising from air pollution. There is an imminent need to find a way to measure air pollution impacts so that appropriate actions can be taken to control air pollution. Therefore, this study attempts to apply a choice experiment to quantifying the environmental costs of four air pollution impacts (mortality, morbidity, soiling damage, and poor visibility), using a specific case study of Seoul. We consider the trade-offs between price and attributes of air pollution impacts for selecting a preferred alternative and derive the marginal willingness to pay (WTP) estimate for each attribute. According to the results, the households' monthly WTP for a 10% reduction in the concentrations of major pollutants in Seoul was found to be approximately 5494 Korean won (USD 4.6) and the total annual WTP for the entire population of Seoul was about 203.4 billion Korean won (USD 169.5 million). This study is expected to provide policy-makers with useful information for evaluating and planning environmental policies relating specifically to air pollution.     

Measuring the welfare cost of air pollution in Shanghai: evidence from the housing market

The purpose of this study is to quantify the marginal willingness to pay (MWTP) for clean air in China. We provide the first estimate of MWTP for clean air by implementing a hedonic method using housing price and air quality data from Shanghai. Our estimates imply that air pollution has a significant and negative impact on housing price. We also find that the willingness to pay for better air quality varies significantly across different income groups. This paper helps to deepen our understanding of the economic impacts of air pollution in emerging Asian metropolises where residents are suffering from the most severe respiratory health problems.     

An Evaluation of Air Pollution Health Impacts and Costs in São Paulo, Brazil

The need to determine cost estimates of the hazardous effects of diseases is important in order to establish the priorities of actions for prevention and health management. The evaluation of air pollution impacts on health, based on expenditures, has been carried out, but there are obvious comparison difficulties among countries, as the health-per-capita investment varies enormously. In order to achieve a standard indicator, we applied the Disability-Adjusted Life Years (DALY) method to estimate the health burden and cost estimate due to air pollution in São Paulo, Brazil. The basic methodology was the utilization of dose–response curves of epidemiological studies conducted in São Paulo to assess air pollution and its health effects. DALY attributable to air pollution in São Paulo added up to 28,212 years annually. An indirect health cost attributable to air pollution resulted in US$ 3,222,676. This estimate refers to the children and the elderly population. These results give a preliminary and underestimated value of the burden of diseases promoted by air pollution.     

A new recoding method for treating protest responses in contingent valuation studies using travel cost data

In this paper, it is proposed one method to recode protest responses applicable to the simple dichotomous format valuation question made to visitors to natural environment in contingent valuation studies. Those respondents that give a protest response but have a travel cost greater than the bid proposed in the valuation question are recoded as an affirmative answer to the proposed payment. The economic justification lies in the minimum willingness to pay for enjoying the environment that travel cost reveals, while valuation question tries to obtain information about respondent maximum willingness to pay. Recoding allows to recover information and to improve estimates, accuracy. It also avoids computational complexity associated with sample selection models used to avoid biases derived from excluding protest responses.     

Towards the estimation of demand for recycling in Chile: The case of Santiago

In developing countries, the recycling of municipal solid waste (MSW) as an alternative to the traditional MSW management requires an economic sustainability valuation. From this perspective, the estimation of demand for recycling is crucial. In this paper, we study the case of recycling MSW in Santiago, Chile. We estimate the relation between the monthly amount of MSW separated voluntarily from apartments located in Santiago and the monthly price required to participate in a municipal recycling program. We consider the transference of the municipal cost savings to the owners of the apartments due to the amount of MSW separated for recycling, which is not collected and deposited in the current MSW system. For the estimation, we use concepts from environmental economics and psychology, analyzing the operation and municipal costs incurred by current MSW management and designing and applying a survey based on a contingent valuation method (CVM) approach. The results indicate that the percentage of MSW separated for recycling varies between a 27.98% and 33.18%, that only four MSW types are affected by a variation of the monthly price, and that a reduction of monthly collection trips in the current MSW system from 24 to 18 can be obtained. Additionally, we discuss a number of methodological aspects to be considered in a similar study of valuation of recycling in developing countries. Our conclusion is that Santiago has favorable conditions for the implementation of a recycling program as an alternative to the current MSW system.     

A Benefit‐Cost Analysis of Total Maximum Daily Load Implementation1

Abstract: Total Maximum Daily Load (TMDL) implementation generates benefits and costs from water quality improvements, which are rarely quantified. This analysis examines a TMDL written to address bacteria and aquatic‐life‐use impairments on Abrams and Opequon Creeks in Virginia. Benefits were estimated using a contingent valuation survey of local residents. Costs were based on the number and type of best management practices (BMPs) necessary to achieve TMDL pollution reduction goals. BMPs were quantified using watershed‐scale water quality simulation models (Generalized Watershed Loading Function and Hydrological Simulation Program‐FORTRAN). Based on our projections, the costs to achieve TMDL induced pollution reduction goals outweigh the estimated benefits. Benefit‐cost ratios ranged between 0.1 and 0.3.     

Better than their reputation: enhancing the validity of contingent valuation mail survey results through citizen expert groups

Although contingent valuation is the dominant technique for the valuation of public projects, especially in the environmental sector, the high costs of contingent valuation surveys prevent the use of this method for the assessment of relatively small projects. The reason for this cost problem is that typically only contingent valuation studies which are based on face-to-face interviews are accepted as leading to valid results. Particularly in countries with high wages, face-to-face surveys are extremely costly considering that for a valid contingent valuation study a minimum of 1000 completed face-to-face interviews is required. This paper tries a rehabilitation of mail surveys as low-budget substitutes for costly face-to-face surveys. Based on an empirical contingent valuation study in Northern Thailand, it is shown that the validity of mail surveys can be improved significantly if so-called Citizen Expert Groups are employed for a thorough survey design.     

Quantifying the human health benefits of curbing air pollution in Shanghai

Urban development in the mega-cities of Asia has caused detrimental effects on the human health of its inhabitants through air pollution. However, averting these health damages by investing in clean energy and industrial technologies and measures can be expensive. Many cities do not have the capital to make such investments or may prefer to invest that capital elsewhere. In this article, we examine the city of Shanghai, China, and perform an illustrative cost/benefit analysis of air pollution control. Between 1995 and 2020 we expect that Shanghai will continue to grow rapidly. Increased demands for energy will cause increased use of fossil fuels and increased emissions of air pollutants. In this work, we examine emissions of particles smaller than 10 microm in diameter (PM10), which have been associated with inhalation health effects. We hypothesize the establishment of a new technology strategy for coal-fired power generation after 2010 and a new industrial coal-use policy. The health benefits of pollution reduction are compared with the investment costs for the new strategies. The study shows that the benefit-to-cost ratio is in the range of 1-5 for the power-sector initiative and 2-15 for the industrial-sector initiative. Thus, there appear to be considerable net benefits for these strategies, which could be very large depending on the valuation of health effects in China today and in the future. This study therefore provides economic grounds for supporting investments in air pollution control in developing cities like Shanghai.     

USING CONTINGENT VALUATION AND BENEFIT TRANSFER TO EVALUATE WATER SUPPLY IMPROVEMENT BENEFITS1

ABSTRACT: Many water systems in small cities and rural areas throughout the United States are facing water quality and supply problems. These problems are typically not the result of an unexpected event, but are the result of growth trends or decreasing water quality experienced over several years. This analysis uses the contingent valuation and benefit transfer methods to evaluate the willingness to pay for a rural water system in northcentral Montana. Both of the procedures resulted in similar values, ranging from about $4.05 to $7.50 per household per month for urban residents and $5.40 to $11.50 per household per month for rural residents, which is equal to 11 percent to 23 percent of current average water costs. The willingness to pay estimates do not include non-household water users. This analysis shows that useful planning information can be obtained from relatively inexpensive contingent valuation mail survey data and the benefit transfer method as long as the limitations of the data are understood. The willingness to pay for ensuring good quality rural water supplies in the future is likely to be low compared to the costs of extensive diversion and treatment systems. Willingness to pay estimates provide decision makers with information that can be used to avoid building a large water supply system that water users do not want to connect to because of high costs.     

An assessment of household willingness to pay for curbside recycling: a comparison of payment card and referendum approaches

Curbside recycling is a tool that communities use to reduce the need for landfill space. This study provides contingent valuation estimates of household willingness to pay (WTP) to continue a curbside recycling program in the face of budget cuts. Comparisons of two forms of the contingent valuation method (CVM) are provided: a single bounded referendum and a payment card. Neither approach emerges as unambiguously superior. Response rates were virtually identical. Both approaches show that support for curbside recycling is highly sensitive to price. Regression results from the payment card provided a more thorough identification of socio-demographic variables associated with WTP than the referendum, but the explanatory power of the two regressions did not differ significantly. The referendum estimates of mean WTP exceed those from the payment card, although the disparities are less than those typically reported in the CVM literature. Local policy makers cited the CVM results as influencing their decisions regarding funding options for the future of the program, and seemed to appreciate the fact that the two approaches provided a fairly narrow range of estimates of WTP. In an era when more of the burden of financing of environmental programs is being shifted to the local level, use of CVM to estimate the WTP of consumers for highly disaggregated goods and services designed to achieve environmental improvement will likely become more relevant to local decision makers who are interested in understanding their constituents' views.     

Collective action: an alternative institutional arrangement for reducing water pollution in an industrial estate in India

This study explores the possibility of collective action as an alternative option for reducing water pollution for a cluster of small-scale industries. A case study of the Nandesari Industrial Estate in Gujarat, India, demonstrates the roles played by different agents, such as affected parties, polluters, non-governmental organizations, regulators and the court. The study empirically estimates the 'benefits' and 'costs' of water pollution abatement for a cluster of 250 small-scale industries at Nandesari, and uses these estimates for a social cost-benefit analysis. Benefits are estimated using the contingent valuation method, with a 'willingness to accept' format for the rural areas, and a 'willingness to pay' format for the urban area of the nearby Vadodara city. The article considers costs of command and control, market-based solutions and the option of common effluent treatment as alternative scenarios. It discusses how collective action and joint abatement at a common effluent treatment plant (CETP) by the 250 industries efficiently comply with the State Pollution Control Board norms, which had not been possible for the factories acting individually over the last 20 years. Finally, a detailed social cost-benefit analysis has been undertaken to estimate the net present social benefits with and without CETP. The cost-benefit analysis shows the economic advantage and social desirability of 'collective action' (joint treatment with CETP institutional arrangement) for water pollution abatement with respect to all possible scenarios comprising shadow prices of investment, foreign exchange, unskilled labour and equity considerations.     

Valuation of Ecological Resources and Functions

/ Ecological resources are natural resources that provide certain necessary but overlooked system maintenance functions within ecosystems. Environmental economics is in search of an appropriate analysis framework to determine economic values of such resources. This paper presents a framework that estimates and compiles the components of value for a natural ecosystem. The framework begins with the ecological processes involved, which provide functions within the ecosystem and services valued by humans. We discuss the additive or competive nature of these values, and estimate these values through conventional and unconventional techniques. We apply the framework to ecological resources in a shrub-steppe dryland habitat being displaced by development. We first determine which functions and services are mutually exclusive (e.g., farming vs soil stabilization) and which are complementary or products of joint production (e.g., soil stabilization and maintenance of species). We then apply benefit transfer principles with contingent valuation methodology (CVM), travel cost methodology (TCM), and hedonic damage pricing (HDP). Finally, we derive upper-limit values for more difficult-to-value functions through the use of human analogs, which we argue are the most appropriate method of valuation under some circumstances. The highest values of natural shrub-steppe habitat appear to be derived from soil stabilization.KEY WORDS: Natural resource economics; Ecological economics; Ecological resources; Shrub-steppe; Environmental valuation; Cost; Benefit; Value     

Public policy and the value of the environment: an alternative approach

There is a growing concern regarding the ‘true’ GNP. The claim is that the cost of environmental degradation should be taken into account when calculating welfare measures for society which can be derived from the system of national accounts (SNA). However, the reason that it has not been done is the difficulty of calculating the true ‘price of the environment’. The literature recognizes two types of measurements. One is based on indirect measures (e.g. hedonic methods) while the second is based on direct methods (e.g. contingent valuation methods). There is an alternative approach which is suggested in this paper. The new method relies on the assumption that what we see in reality is the outcome of a maximization process of some social welfare function which includes not only GNP but other elements of which environmental quality is one. By observing the reality, we can get some information on the implicit governmental weights and hence on the trade‐off between the GNP and the environment. This is a positive approach rather than a normative one, so future decisions can rely on this measurement as a guide for controversial decisions regarding development versus preservation. The theoretical model is then applied to the Israeli economy as an example in order to have some estimate on the price derived by this method.     

ESTIMATING THE BENEFITS OF PHOSPHORUS POLLUTION REDUCTIONS: AN APPLICATION IN THE MINNESOTA RIVER1

ABSTRACT: In order to make economically efficient decisions about water quality improvements, data on both the costs and benefits of these improvements is needed. However, there has been little research on the benefits of reducing phosphorus pollution which implies that policy decisions are not able to make the comparison of costs and benefits that is essential for economic efficiency. This research attempts to ameliorate this situation by providing an estimate of the benefits of a 40 percent reduction in phosphorus pollution in the Minnesota River. A 1997 mail survey gathered information on Minnesota residents'use of a recreational site on the Minnesota River, the Minnesota Valley National Wildlife Refuge, and their willingness to pay for phosphorus reductions in the Minnesota River. The random effects probit model used in this research to investigate household willingness to pay for phosphorus pollution reductions in the Minnesota River incorporates recent innovations in nonmarket valuation methodology by using both revealed and stated preference data. This model estimated annual household willingness to pay for phosphorus reductions in the Minnesota River at $140. These results may be used in combination with cost estimates to determine the economic efficiency of phosphorus clean up.     

Costs and benefits of urban erosion and sediment control: The North Carolina experience

The EPA’s new nonpoint source pollution control requirements will soon institutionalize urban erosion and sediment pollution control practices nationwide. The public and private sector costs and social benefits associated with North Carolina’s program (one of the strongest programs in the country in terms of implementation authority, staffing levels, and comprehensiveness of coverage) are examined to provide general policy guidance on questions relating to the likely burden the new best management practices will have on the development industry, the likely costs and benefits of such a program, and the feasibility of running a program on a cost recovery basis. We found that urban erosion and sediment control requirements were not particularly burdensome to the development industry (adding about 4% on average to development costs). Public-sector program costs ranged between $2.4 and $4.8 million in fiscal year 1989. Our contingent valuation survey suggests that urban households in North Carolina are willing to pay somewhere between $7.1 and $14.2 million a year to maintain current levels of sediment pollution control. Our benefit-cost analysis suggests that the overall ratio is likely to be positive, although a definitive figure is elusive. Lastly, we found that several North Carolina localities have cost recovery fee systems that are at least partially self-financing. This article is based on research by the authors for the North Carolina Department of Environment, Health and Natural Resources (DEHNR). The views are those of the research team and do not necessarily reflect the position of DEHNR.     

Health benefits valuation of regulatory intervention for air pollution control in thermal power plants in Delhi,India

This study estimates minimum marginal health benefits (morbidity reduction only) of air pollution control and total health benefits arising from regulatory intervention regarding the adoption of the World Bank emission guidelines (WBEG) for thermal power plants (TPPs) in Delhi. The Industrial Source Complex-Short-Term Version–3 (ISCST3) model has been used to estimate the contribution to air pollution from TPPs. The household health production function (avertive behaviour) has been used to value health benefits of air pollution control. The study revealed that the ambient air pollution due to TPPs is reduced by between 62.17% to 83.45% by adopting the WBEG. Annual marginal benefit due to reduction in exposure to air pollution by 1 μg m^?3 is estimated to be US$0.353 per person. Total annual health benefits for adopting the WBEG for TPPs are estimated at US$235.19 million. This study provides a novel methodology to evaluate health benefits of regulatory intervention.     

欧美经验对我国“十三五”大气污染防治战略的启示

当前,我国大气污染形势严峻,复合型污染特征突出。新修订的《中华人民共和国环境保护法》、《中华人民共和国大气污染防治法》、《环境空气质量标准》以及《大气污染防治行动计划》的发布和实施,对我国大气污染防治工作提出了更高要求。"十三五"时期是我国环境保护负重前行困难期和大有作为关键期,也是我国改善大气环境质量的攻坚期,需要系统谋划大气污染防治战略。欧盟和美国在制定大气污染防治战略时,以改善空气质量为核心,构建了涵盖一次污染物和二次污染物的多污染物目标体系,规定了环境浓度、排放量、直观感受(能见度)、健康以及管理等约束性指标,并且针对大气污染防治政策分析实施的成本与收益,开发相应的模型工具,基于收益成本比进行科学决策。本文对欧美环境规划和战略中的多污染物协同控制目标体系以及大气污染防治政策成本效益评估经验进行梳理,分析我国大气污染防治战略的现状和问题,并提出相关政策建议,以期为解决"心肺之患"、实现环保"十三五"总体目标提供参考。     

The valuation of historical sites: a case study of Valdivia,Chile

The economic valuation of cultural heritage is an area of increasing interest and an important research topic in the emerging field of cultural economics. Many services and values associated with cultural heritage are not traded in markets, and their estimation requires methods developed for the valuation of non-market goods, such as those used in environmental economics. This paper applies the contingent valuation method with double dichotomous choice to estimate the value of historical sites in the city of Valdivia, Chile. The valuation exercise was implemented by designing a hypothetical guided walking tour to a cluster of historical sites in the city centre, and surveying tourists visiting the city during the summer of 2004. Parametric and non-parametric statistical methods were used to estimate the survival distribution and the mean and median estimates of the willingness-to-pay (WTP). The study emphasizes the importance of explicitly treating heterogeneous preferences and the sensitivity of the survival distribution to the estimation methods used.