A More Comprehensive Estimate of the Value of Water Quality
Coauthored by researchers at RFF, this article in the Journal of Public Economics estimates homeowners' willingness to pay for water quality improvements.
Abstract
The estimated marginal cost of US water pollution control often exceeds its marginal benefit. We provide intuition, theory and empirical evidence suggesting that the hedonic property model—a common revealed-preference approach to valuing pollution control—may not capture water’s recreational benefits. Using the case of Tampa Bay, Florida, we estimate willingness to pay (WTP) for water quality improvements by combining a recreation demand model with a hedonic property model. Results indicate that homeowners have significant WTP for both local and regional recreational water quality improvements and suggest that prior hedonic studies may underestimate the benefits of water pollution control.
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