DETERMINANTS OF LANDOWNER'S WILLINGNESS TO PAY FOR FLOOD HAZARD REDUCTION1

ABSTRACT: Estimated benefits of flood control projects are typically limited to avoided property damages. However, the possibility that there are (1) benefits from reduced psychological stress among flood plain occupants, and (2) benefits to the community has long been recognized. A survey of landowners residing in a flood plain in Roanoke, Virginia, found that nonproperty considerations did help explain their expressed willingness to pay for flood control. Of particular importance was the respondents' concern for disruption of the community caused by possible flooding.     

Income and distance-decay effects on willingness to pay estimated by the contingent valuation method

This study suggests a methodology for enhancing accuracy in evaluating amenity by the contingent valuation method when household's willingness to pay (WTP) is dependent to its income and the distance between a respondent's residence and the location of a target facility. Using a linear city model, this study demonstrates the influences of income and distance-decay effects on WTP. Simulations are performed to check the validity of the model, as well as to predict consequences when income and distance-decay effects are not properly treated. Finally, the suggested methodology is applied to two real cases. The estimation results from a structural model show that the calculated total benefit varies largely when income and distance-decay effects exist and are ignored. Also, an ad hoc model generates significantly different estimates from the utility difference model this study adopted. The difference in estimates suggests that the total benefit has to be estimated by a structural model.     

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.     

MEASURING THE VALUE OF POTABLE WATER IN PARTIALLY MONETIZED RURAL ECONOMIES1

ABSTRACT: A pilot study was conducted to test the potential of the Contingent Valuation Methodology (CVM) to reveal the value of non-market goods in a partially monetized subsistence economy. CVM was used to estimate the willingness to pay, in the form of labor, for potable drinking water in a rural river-based community located in the Esmeraldas state of northwest Ecuador. Surveys were administered by personal interviews with families living along the waterways of the Santiago river system who used river water for cooking, drinking, washing, and waste disposal. The mean willingness to pay represented over 23 percent of real income, or 1.4 days per week for a period of one year. Results of multiple regression analysis identified the history of water-related health problems and the number of working adults in a household as significant determinants of willingness to pay. Using a non-monetary, rather than a monetary measure of willingness to pay may provide a more accurate representation of value in a subsistence economy where the use of money is limited. The potential for CVM to measure the benefits of non-market goods in rural developing regions whose economies are only partially monetized is demonstrated.     

AN EMPIRICAL MODEL OF FATALITIES AND INJURIES DUE TO FLOODS IN JAPAN1

ABSTRACT: This paper provides a framework for analyzing flood fatalities and injuries, and it describes the derivation of a generalized flood risk (i.e., flood consequences and their probabilities) function by introducing an integrated index (the number of residential buildings affected by a flood) that represents the major change in the power relation among the flood intensity, regional vulnerability, and resilience. Both the probabilities and the numbers of fatalities and injuries clearly increase significantly after the flood severity (in terms of the number of inundated buildings) passes a branch point. Below the branch point, it is still possible for fatalities and injuries to occur because of the variability in the data and the uncertainty in the predicted fatality values. The empirical models of fatalities and injuries due to floods in Japan suggested the usefulness in predicting fatalities and injuries and evaluating the efficacy of the warning or other emergency response measures.     

FLOODPLAINS AND HOUSING VALUES: IMPLICATIONS FOR FLOOD MITIGATION PROJECTS1

ABSTRACT: The hedonic valuation method was used to quantify the impact of floodplain location on housing values in Fargo‐Moor‐head. Being located in the 100‐year floodplain lowered the home values by $8,990, and such homes were worth $10,241 less than similar homes located outside the floodplain before the major flood event of 1997. Required flood insurance premiums for these homes were determined to account for approximately 81 percent of this price depreciation. In contrast, homes in the 500‐year floodplain were worth $3,100 more than similar homes not in the floodplain. It was concluded that more disclosure is needed regarding the location of the 500‐year floodplain, and that the hedonic valuation method can be used to calculate the economic gains and losses associated with flood mitigation projects or floodplain remapping efforts that result in the reclassification of the legal floodplain status of individual homes.