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Elasticities of Demand and Willingness to Pay for Environmental Services in Sweden

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Author Info
Stina Hökby
Tore Söderqvist ()
Abstract

Are environmental services luxuriesor necessities? Are low-income groupsrelatively more willing to pay forenvironmental improvements than high-incomegroups? The discussion on the shape of theenvironmental Kuznets curve and environmentaljustice call for analyses that approach thesequestions. Following a survey-based approachfor modelling the demand for public goods, thispaper provides estimates of income and priceelasticities of demand for reduced marineeutrophication effects in the case of theBaltic Sea, using data from five Swedishcontingent valuation studies. Point estimatesindicate that reduced marine eutrophicationeffects can be classified as a necessity and anordinary and price elastic service. Confidenceintervals show however that the classificationas a necessity is not statisticallysignificant. Income elasticities of willingnessto pay, not to be confused with incomeelasticities of demand, are estimated for abroad range of environmental services inSweden. A basic finding is that income tends toinfluence willingness to pay positively andsignificantly. The elasticity estimates are inmost cases greater than zero, but less thanunity, indicating that the benefits ofenvironmental improvements tend to beregressively distributed. In a cost-benefitanalysis of a project suggesting environmentalimprovements, distributional concerns thereforecall for an introduction of weights or at leasta sensitivity analysis of how weighting wouldchange decisions about the project's socialprofitability. Copyright Kluwer Academic Publishers 2003

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File URL: http://hdl.handle.net/10.1023/B:EARE.0000003581.97411.75
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Publisher Info
Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 26 (2003)
Issue (Month): 3 (November)
Pages: 361-383
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Handle: RePEc:kap:enreec:v:26:y:2003:i:3:p:361-383

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Related research
Keywords: demand for public goods; environmental justice; environmental services; eutrophication; income distribution; income elasticity; price elasticity;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Johansson, Per-Olov, 1990. "Willingness to Pay Measures and Expectations: An Experiment," Applied Economics, Taylor and Francis Journals, vol. 22(3), pages 313-29, March.
  2. Gramlich, Edward M & Rubinfeld, Daniel L, 1982. "Micro Estimates of Public Spending Demand Functions and Tests of the Tiebout and Median-Voter Hypotheses," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 536-60, June. [Downloadable!] (restricted)
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  4. Richard T. Carson & Nicholas E. Flores & Norman F. Meade, 2000. "Contingent Valuation: Controversies and Evidence," University of California at San Diego, Economics Working Paper Series 96-36r, Department of Economics, UC San Diego. [Downloadable!]
    Other versions:
  5. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-96, June.
    Other versions:
  6. Walsh, Richard G. & Johnson, Donn M. & McKean, John R., 1989. "Issues In Nonmarket Valuation And Policy Application: A Retrospective Glance," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(01), July. [Downloadable!]
  7. Bengt Kristrom & Pere Riera, 1996. "Is the income elasticity of environmental improvements less than one?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 7(1), pages 45-55, January. [Downloadable!] (restricted)
  8. Nicholas E. Flores & Richard T. Carson, 1995. "The Relationship Between the Income Elasticities of Demand and Willingness to Pay," University of California at San Diego, Economics Working Paper Series 95-31, Department of Economics, UC San Diego.
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  9. Bergstrom, Theodore C & Rubinfeld, Daniel L & Shapiro, Perry, 1982. "Micro-Based Estimates of Demand Functions for Local School Expenditures," Econometrica, Econometric Society, vol. 50(5), pages 1183-1205, September. [Downloadable!] (restricted)
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  10. Ready, Richard C. & Malzubris, J nis & Senkane, Silva, 2002. "The relationship between environmental values and income in a transition economy: surface water quality in Latvia," Environment and Development Economics, Cambridge University Press, vol. 7(01), pages 147-156, February. [Downloadable!]
  11. Bengt Kriström, 1993. "Comparing continuous and discrete contingent valuation questions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 3(1), pages 63-71, February. [Downloadable!] (restricted)
  12. Li Chuan-Zhong & Mattsson Leif, 1995. "Discrete Choice under Preference Uncertainty: An Improved Structural Model for Contingent Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 28(2), pages 256-269, March. [Downloadable!] (restricted)
  13. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December. [Downloadable!] (restricted)
  14. Richard T. Carson & Nicholas E. Flores & Kerry M. Martin & Jennifer L. Wright, 1994. "Contingent Valuation and Revealed Preference Methodologies: Comparing the Estimates for Quasi-Public Goods," University of California at San Diego, Economics Working Paper Series 94-07, Department of Economics, UC San Diego.
  15. Arrow, Kenneth & Bolin, Bert & Costanza, Robert & Dasgupta, Partha & Folke, Carl & Holling, C.S. & Jansson, Bengt-Owe & Levin, Simon & M?ler, Karl-G?ran & Perrings, Charles & Pimentel, David, 1996. "Economic growth, carrying capacity, and the environment," Environment and Development Economics, Cambridge University Press, vol. 1(01), pages 104-110, February. [Downloadable!]
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  16. Cummings, Ronald G & Harrison, Glenn W & Rutstrom, E Elisabet, 1995. "Homegrown Values and Hypothetical Surveys: Is the Dichotomous Choice Approach Incentive-Compatible?," American Economic Review, American Economic Association, vol. 85(1), pages 260-66, March.
  17. Sandström, Mikael, 1996. "Recreational Benefits from Improved Water Quality: A Random Utility Model of Swedish Seaside Recreation," Working Paper Series in Economics and Finance 121, Stockholm School of Economics. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jette Jacobsen & Nick Hanley, 2009. "Are There Income Effects on Global Willingness to Pay for Biodiversity Conservation?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(2), pages 137-160, June. [Downloadable!] (restricted)
    Other versions:
  2. Taran Fæhn and Annegrete Bruvoll, 2006. "Richer and cleaner - at others' expense?," Discussion Papers 477, Research Department of Statistics Norway. [Downloadable!]
  3. Parry, Ian & Walls, Margaret & Sigman, Hilary & Williams III, Roberton, 2005. "The Incidence of Pollution Control Policies," Discussion Papers dp-05-24, Resources For the Future. [Downloadable!]
    Other versions:
  4. Udo Ebert, 2003. "Environmental Goods and the Distribution of Income," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 25(4), pages 435-459, August. [Downloadable!] (restricted)
  5. Karen Turner & Nick Hanley & Janine De Fence, 2009. "Do Productivity Improvements Move Us Along the Environmental Kuznets Curve?," Working Papers 09-08, University of Strathclyde Business School, Department of Economics. [Downloadable!]
    Other versions:
  6. Copeland, Brian R., 2005. "Policy Endogeneity and the Effects of Trade on the Environment," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 34(1), April. [Downloadable!]
  7. Karen Turner & Nick Hanley, 2009. "How do improvements in labour productivity in the Scottish economy affect the UK position on the Environmental Kuznets Curve?," Working Papers 09-15, University of Strathclyde Business School, Department of Economics. [Downloadable!]
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