Valuing reductions in environmental pollution in a residential location context

Abstract

A stated preference ranking experiment is designed to estimate the willingness-to-pay (WTP) for reducing the amount of atmospheric pollution in a group-based residential location context. Important issues are the proper definition of the context and the variable metric for the environmental attribute. Sample members were asked to rank 10 options arising from variations in the attributes travel time to work and to study, rent of the house and an environmental attribute (the number of days of Alert, in terms of concentration of PM10, at a dwelling's location). Multinomial logit models based on a consistent microeconomic framework were estimated for various stratifications of the data (income, pollution sensitivity, and type of dwelling currently inhabited). From these subjective values of time and WTP were derived for reductions in the number of days of alert and hence the amount of pollutant concentration at a given location. The WTP came out at about 1% of the family income for reducing one contingence day per year; this is approximately 60% higher than an estimate reported for the city of Edmonton, Canada, but the average PM10 concentration in Santiago is about six times higher. (C) 2002 Elsevier Science Ltd. All rights reserved.