Valuing water quality in China: purpose, approach and policy

The economic valuation of water quality in a rapidly developing country such as China should be undertaken to determine when the benefits from rapid growth begin to exceed the costs from the same. The best approach is to ascertain the total economic valuation of the environmental resource. This includes all of the various uses of the resource, and even those values that are unconnected to individual use (e.g. natural and aesthetic values).A method known as contingent valuation (CV) is used to ascertain these forms of value. This approach is demonstrated here in an application to river water quality in the Beijing area. A CV study is reported in which Beijing area citizens reported an average willingness to pay about 1.3% of annual income in order to prevent further deterioration of river water quality. Aggregation over the representative population indicates that the perceived cost of further river quality deterioration is in the neighbourhood of USD60 million. Such a measure provides some indication of the socially desired "stopping point" - in the pursuit of economic growth at the expense of environmental quality.