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Valuing water reources in developing countries: A semiparametric approach to valuation models

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  • Walter Belluzzo

Abstract

Valuation of the benefits from the preservation of water resources is often of interest to policy makers and funding institutions. In developing countries, valuation studies are potentially useful for designing funding policies when inequality is a concern. To fulfil this goal, however, valuation studies must provide detailed information about the whole distribution of benefits, not only its mean. This article applies semiparametric methods to acquire that information and presents their application to a valuation study involving an important Brazilian River basin. Results obtained suggest that the semiparametric model reveal a heterogeneity structure that cannot be accommodated by the logistic model. Specifically, it was found that the willingness-to-pay distribution is bimodal. As the logit places mass symmetrically, it tends to overestimate net benefits, leading to the undue acceptance of the project.

Suggested Citation

  • Walter Belluzzo, 2004. "Valuing water reources in developing countries: A semiparametric approach to valuation models," Econometric Society 2004 Latin American Meetings 286, Econometric Society.
  • Handle: RePEc:ecm:latm04:286
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    More about this item

    Keywords

    binary response; cost-benefit analysis; contingent valuation;

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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