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Estimating the Willingness to Pay for Environmental Resources in the Chilean Patagonia


Author Info

  • Garces-Voisenat, Juan-Pedro

    (Wake Forest University, Economics Department)

  • Mukherjee, Zinnia

    (AIER and Connecticut College)


In this paper we assess, through contingent valuation surveys, the willingness to pay (WTP) of the population for more environment-friendly sources of energy, in the context of the proposed construction of big hydroelectric dams in the Chilean Patagonia region. We use two different data samples constructed from the survey responses: (1) A sample of Chileans currently living in Chile. These are individuals who will be receiving the economic benefits that will stem from hydroelectric dams constructed in Patagonia. Their WTP reflects the “user value” of the resource to Chileans. (2) A sample of non-Chileans or Chileans living outside Chile. Their WTP reflects the “existence value” of the natural environment in Patagonia and the expected amount people are willing to pay to protect its pristine conditions. We identify the key determinants that affect the WTP estimates. We then compare this to the real costs of generating electricity with the different currently available technologies. The WTP estimate from sample 1 would provide the Chilean governments a numerical value of the contributions Chilean residents are willing to make to protect the natural environment in Patagonia. The estimate from sample 2 will indicate the contribution that the rest of the world is willing to make in order to preserve unique natural environments and wildlife in remote places of the globe. Overall, it should be a good guide for policymaking in energy matters for developing countries.

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Bibliographic Info

Paper provided by Wake Forest University, Economics Department in its series Working Papers with number 105.

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Length: 38 pages
Date of creation: 10 Sep 2012
Date of revision:
Handle: RePEc:ris:wfuewp:0105

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Keywords: Energy; Environment; Sustainable Development; Chile; Patagonia;

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  1. Hoehn, John P. & Randall, Alan, 2002. "The effect of resource quality information on resource injury perceptions and contingent values," Resource and Energy Economics, Elsevier, vol. 24(1-2), pages 13-31, February.
  2. Turpie, Jane K., 2003. "The existence value of biodiversity in South Africa: how interest, experience, knowledge, income and perceived level of threat influence local willingness to pay," Ecological Economics, Elsevier, vol. 46(2), pages 199-216, September.
  3. Sujitra Vassanadumrongdee & Shunji Matsuoka, 2005. "Risk Perceptions and Value of a Statistical Life for Air Pollution and Traffic Accidents: Evidence from Bangkok, Thailand," Journal of Risk and Uncertainty, Springer, vol. 30(3), pages 261-287, May.
  4. Trudy Ann Cameron & Michelle D. James, 1986. "The Determinants of Value for a Recreational Fishing Day: Estimates from a Contingent Valuation Survey," UCLA Economics Working Papers 405, UCLA Department of Economics.
  5. Trudy Ann Cameron & Jeffrey Englin, 1996. "Respondent Experience and Contingent Valuation of Environmental Goods," UCLA Economics Working Papers 752, UCLA Department of Economics.
  6. Fredrik Carlsson & Olof Johansson-Stenman, 2000. "Willingness to pay for improved air quality in Sweden," Applied Economics, Taylor & Francis Journals, vol. 32(6), pages 661-669.
  7. Blomquist, Glenn C. & Whitehead, John C., 1998. "Resource quality information and validity of willingness to pay in contingent valuation," Resource and Energy Economics, Elsevier, vol. 20(2), pages 179-196, June.
  8. Donald M. McLeod & Olvar Bergland, 1999. "Willingness-to-Pay Estimates Using the Double-Bounded Dichotomous-Choice Contingent Valuation Format: A Test for Validity and Precision in a Bayesian Framework," Land Economics, University of Wisconsin Press, vol. 75(1), pages 115-125.
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