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Higher water tariffs for less river pollution--Evidence from the Min River and Fuzhou City in China

Listed author(s):
  • Jiang, Yi
  • Jin, Leshan
  • Lin, Tun

Nonpoint source pollution in the upstream areas of a water basin has become a serious threat to urban drinking water safety in China. Payment for environmental services (PES) is seen as a promising instrument to address the problem, for which one key information is the willingness to pay (WTP) of urban water users for water source pollution control. Using a contingent valuation survey data, we estimate the WTP of Fuzhou City residents for pollution control by the livestock farms located at the upstream Min River. When the protest responses are not distinguished, the mean WTP is estimated at CNY0.21/m3, or 10% of the current base tariff. When the protestors are distinguished, the estimated mean WTP equals CNY0.51. The total annual WTPs of the two cases are CNY22Â million and CNY53Â million, respectively, which lead to potentially opposite conclusions about Fuzhou's participation in the provincial PES program, to which Fuzhou contributes CNY30Â million. The results highlight the importance of addressing protest responses in contingent valuation as well as in policymaking and implementation. We find that the WTP varies greatly with income, which calls for attention to the affordability and distribution issues of a water tariff reform.

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Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 22 (2011)
Issue (Month): 2 (June)
Pages: 183-195

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Handle: RePEc:eee:chieco:v:22:y:2011:i:2:p:183-195
Contact details of provider: Web page: http://www.elsevier.com/locate/chieco

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  1. Engel, Stefanie & Pagiola, Stefano & Wunder, Sven, 2008. "Designing payments for environmental services in theory and practice: An overview of the issues," Ecological Economics, Elsevier, vol. 65(4), pages 663-674, May.
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  3. Halstead, John M. & Luloff, A.E. & Stevens, Thomas H., 1992. "Protest Bidders In Contingent Valuation," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 21(2), October.
  4. Ojeda, Monica Ilija & Mayer, Alex S. & Solomon, Barry D., 2008. "Economic valuation of environmental services sustained by water flows in the Yaqui River Delta," Ecological Economics, Elsevier, vol. 65(1), pages 155-166, March.
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  6. Dominika Dziegielewska & Robert Mendelsohn, 2007. "Does “No” mean “No”? A protest methodology," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(1), pages 71-87, September.
  7. Michael Hanemann & John Loomis & Barbara Kanninen, 1991. "Statistical Efficiency of Double-Bounded Dichotomous Choice Contingent Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1255-1263.
  8. Bulte, Erwin & Gerking, Shelby & List, John A. & de Zeeuw, Aart, 2005. "The effect of varying the causes of environmental problems on stated WTP values: evidence from a field study," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 330-342, March.
  9. Ian J. Bateman & Brett H. Day & Diane P. Dupont & Stavros Georgiou, 2009. "Procedural Invariance Testing of the One-and-One-Half-Bound Dichotomous Choice Elicitation Method," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 806-820, November.
  10. Wang, Hua & Xie, Jian & Li, Honglin, 2008. "Domestic water pricing with household surveys : a study of acceptability and willingness to pay in Chongqing, China," Policy Research Working Paper Series 4690, The World Bank.
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