Stated preference methods (SPM), such as the contingent valuation method (CVM) and the choice experiment method (CEM), have traditionally been applied in developed countries to estimate these countries’ citizens’ willingness to pay (WTP) for various interventions for environmental conservation and sustainable management of natural resources.
Economic benefits estimated from such studies are weighed against the economic costs of interventions targeted at environmental conservation and sustainable management of natural resources, in order to understand whether such interventions would be efficient or in economic terms, a Pareto improvement.
Environmental goods and natural resources are public goods which are not traded in markets, and hence do not possess readily available prices which can be used for such cost-benefit analysis.
Therefore SPM which rely on constructed, hypothetical markets in which respondents participate to state their WTP for different interventions are used to capture their value.
Such studies are not so often conducted in developing country contexts since it is assumed that due to their tight budgets constraints and high discount rates, developing country citizens may not have the ability to pay for luxury goods such as interventions for environmental conservation or sustainable natural resources management.
This paper endeavors to contribute to the growing literature on the developing country citizens’ valuation of interventions that propose environmental conservation or sustainable natural resources management in developing countries, by presenting the results of a choice experiment study conducted in India.
The study investigates whether citizens of West Bengal municipalities located along the banks of the river Ganga are willing to pay higher municipality taxes for an intervention, namely an improvement in the capacity and technology of a sewage treatment plant (STP).
This improved STP proposes to reduce the water pollution in this great river, which is not only a major input to various economic activities but also an important source of religious, cultural and historical values.
Results of the study show the following:
even though almost 98% of the randomly selected 150 local citizens stated that they cared about the quality of water in particular, a great majority (90)% protested the intervention by not choosing the improved water quality scenario in at least one of the eight hypothetical markets
citizens are willing to pay significant amounts to ensure that the intervention takes place, and improved STP treats larger amounts of waste water to a higher quality before discharging it to the Ganga