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Frontiers of Economics in China

Front. Econ. China    2015, Vol. 10 Issue (1) : 168-199     https://doi.org/10.3868/s060-004-015-0008-0
research-article
Economic Value of Water Quality Improvement by One Grade Level in Erhai Lake: A Willingness-to-Pay Survey and a Benefit-Transfer Study
Hua Wang1,Yuyan Shi2(),Yoonhee Kim,3,Takuya Kamata4
1. Policy Research Center for Environment and Economy, Ministry of Environmental Protection,Beijing 100029, China
2. Department of Family Medicine and Public Health, University of California, San Diego, CA92093, USA
3. Development Research Group, The World Bank, Washington DC 20433, USA
4. Development Research Group, The World Bank, Washington DC 20433, USA
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Abstract

Water quality in China has seriously deteriorated in recent years. However, very few valuation studies have been conducted to estimate the monetary values associated with water quality changes. As a result, the decision makers can hardly make rational choices with regard to investments in water quality improvement. This paper presents a valuation study conducted in Dali, Yunnan Province, which aims to estimate the total economic value of improving the water quality of Erhai Lake by one grade level. Both the contingent valuation method and the benefit transfer approach are employed in this study. The contingent valuation estimation strategy reveals that, on average, a household located in Dali is willing to pay about 27 yuan per month continuously for 5 years for the water quality improvement, equivalent to 1.7% of the household monthly income. The elasticity of willingness-to-pay with respect to income is estimated to be 0.28. The internal rate of economic return of the proposed pollution control project is estimated to be 13%. The benefit transfer exercise produces a similar estimation on willingness to pay (WTP) values, with a difference of less than 2% compared with the contingent valuation approach. The results indicate the potential reliability of using the benefit transfer approach for valuation estimations in Chinese provinces.

Keywords contingent valuation      benefit transfer      water quality     
Issue Date: 23 March 2015
 Cite this article:   
Hua Wang,Yuyan Shi,Yoonhee Kim,, et al. Economic Value of Water Quality Improvement by One Grade Level in Erhai Lake: A Willingness-to-Pay Survey and a Benefit-Transfer Study[J]. Front. Econ. China, 2015, 10(1): 168-199.
 URL:  
http://journal.hep.com.cn/fec/EN/10.3868/s060-004-015-0008-0
http://journal.hep.com.cn/fec/EN/Y2015/V10/I1/168
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Hua Wang
Yuyan Shi
Yoonhee Kim,
Takuya Kamata
Zheng Li
Jan Feiling
Hongliang Ren
Haoyong Yu
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