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The Value of Improved Public Services : An Application of the Choice Experiment Method to Estimate the Value of Improved Wastewater Treatment Infrastructure in India

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  • Ekin Birol

    (Madras School of Economics)

  • Sukanya Das

Abstract

In this paper we employ a stated preference environmental valuation technique, namely the choice experiment method, to estimate local publics willingness to pay (WTP) for improvements in the capacity and technology of a sewage treatment plant (STP) in Chandernagore municipality, located on the banks of the River Ganga in India. A pilot choice experiment study is administered to 150 randomly selected Chandernagore residents and the data are analysed using the conditional logit model with interactions. The results reveal that residents of this municipality are willing to pay significant amounts in terms of higher monthly municipality taxes to ensure the full capacity of the STP is used for primary treatment and the technology is upgraded to enable secondary treatment. Overall, the results reported in this paper supports increased investments to improve the capacity and technology of STPs to reduce water pollution, and hence environmental and health risks that are currently threatening the sustainability of the economic, cultural and religious values this sacred river generates.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Development Economics Working Papers with number 23062.

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Date of creation: Jan 2010
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Handle: RePEc:eab:develo:23062

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Keywords: choice experiment method; conditional logit model; River Ganga; sewage treatment plant; water quality; water quantity;

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References

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  1. Wang, Hua, 2002. "Pollution regulation and abatement efforts: evidence from China," Ecological Economics, Elsevier, vol. 41(1), pages 85-94, April.
  2. Sergio Colombo & Nick Hanley & Javier Calatrava-Requena, 2005. "Designing Policy for Reducing the Off-farm Effects of Soil Erosion Using Choice Experiments," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(1), pages 81-95.
  3. Othman, Jamal & Bennett, Jeff & Blamey, Russell, 2004. "Environmental values and resource management options: a choice modelling experience in Malaysia," Environment and Development Economics, Cambridge University Press, vol. 9(06), pages 803-824, December.
  4. Desvousges, William H. & Smith, V. Kerry & Fisher, Ann, 1987. "Option price estimates for water quality improvements: A contingent valuation study for the monongahela river," Journal of Environmental Economics and Management, Elsevier, vol. 14(3), pages 248-267, September.
  5. Birol, Ekin & Koundouri, Phoebe & Kountouris, Yiannis, 2009. "Assessing the economic viability of alternative water resources in water-scarce regions: Combining economic valuation, cost-benefit analysis and discounting," IFPRI discussion papers 908, International Food Policy Research Institute (IFPRI).
  6. Birol, Ekin & Villalba, Eric Rayn & Smale, Melinda, 2009. "Farmer preferences for milpa diversity and genetically modified maize in Mexico: a latent class approach," Environment and Development Economics, Cambridge University Press, vol. 14(04), pages 521-540, August.
  7. Scarpa, Riccardo & Ruto, Eric S. K. & Kristjanson, Patti & Radeny, Maren & Drucker, Adam G. & Rege, John E. O., 2003. "Valuing indigenous cattle breeds in Kenya: an empirical comparison of stated and revealed preference value estimates," Ecological Economics, Elsevier, vol. 45(3), pages 409-426, July.
  8. Glenn Bush & Sergio Colombo & Nick Hanley, 2009. "Should all Choices Count? Using the Cut-Offs Approach to Edit Responses in a Choice Experiment," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 44(3), pages 397-414, November.
  9. Boxall, Peter C. & Adamowicz, Wiktor L., 1999. "Understanding Heterogeneous Preferences in Random Utility Models: The Use of Latent Class Analysis," Staff Paper Series 24090, University of Alberta, Department of Resource Economics and Environmental Sociology.
  10. Cooper, Philip & Poe, Gregory L. & Bateman, Ian J., 2004. "The structure of motivation for contingent values: a case study of lake water quality improvement," Ecological Economics, Elsevier, vol. 50(1-2), pages 69-82, September.
  11. Fernandez, Linda, 1997. "Estimation of Wastewater Treatment Objectives through Maximum Entropy," Journal of Environmental Economics and Management, Elsevier, vol. 32(3), pages 293-308, March.
  12. Fraas, Arthur G. & Munley, Vincent G., 1984. "Municipal wastewater treatment cost," Journal of Environmental Economics and Management, Elsevier, vol. 11(1), pages 28-38, March.
  13. Wuyang Hu, 2004. "Trading off health, environmental and genetic modification attributes in food," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(3), pages 389-408, September.
  14. Ekin Birol & Nick Hanley & Phoebe Koundouri & Yiannis Kountouris, 2007. "The optimal management of wetlands: quantifying trade-offs between flood risks, recreation and biodiversity conservation," Environmental Economy and Policy Research Working Papers 28.2007, University of Cambridge, Department of Land Economics, revised 2007.
  15. De Groote, Hugo & Kimenju, Simon Chege, 2008. "Comparing consumer preferences for color and nutritional quality in maize: Application of a semi-double-bound logistic model on urban consumers in Kenya," Food Policy, Elsevier, vol. 33(4), pages 362-370, August.
  16. Barton, David N., 2002. "The transferability of benefit transfer: contingent valuation of water quality improvements in Costa Rica," Ecological Economics, Elsevier, vol. 42(1-2), pages 147-164, August.
  17. Kenneth E. Train, 1998. "Recreation Demand Models with Taste Differences over People," Land Economics, University of Wisconsin Press, vol. 74(2), pages 230-239.
  18. Markandya, A. & Murty, M.N., 2004. "Cost benefit analysis of cleaning the Ganges: some emerging environment and development issues," Environment and Development Economics, Cambridge University Press, vol. 9(01), pages 61-81, February.
  19. Peter Boxall & Wiktor Adamowicz, 2002. "Understanding Heterogeneous Preferences in Random Utility Models: A Latent Class Approach," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(4), pages 421-446, December.
  20. Nick Hanley & Sergio Colombo & Dugald Tinch & Andrew Black & Ashar Aftab, 2006. "Estimating the benefits of water quality improvements under the Water Framework Directive: are benefits transferable?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(3), pages 391-413, September.
  21. Nick Hanley & Robert Wright & Vic Adamowicz, 1998. "Using Choice Experiments to Value the Environment," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(3), pages 413-428, April.
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