A Non-Market Valuation Approach to Environmental Cost-Benefit Analysis for Sanitary Landfill Project Appraisal

Abstract

Extensive non-engineered landfilling practice in developing countries has raised environmental concerns, but operating a sanitary landfill appears infeasible due to financial incapability. This study aims to determine the feasibility of a sanitary landfill project by including its environmental values into the project appraisal while simultaneously applying three policy-relevant methods—non-market valuation, benefits transfer, and cost-benefit analysis—in two study areas in Peninsular Malaysia. The non-market valuation study used choice modeling, a questionnaire-based technique, to elicit willingness to pay among 624 households toward the environmental attributes of the sanitary landfill. Their responses resulted in the monetary values of the environmental attributes by referring to implicit prices of leachate discharge, bad odor, disease vector and view. The implicit prices of bad odor (RM2.29 per month) and view (RM3.59 per month) in the two study areas were transferable and used as a proxy of additional solid waste disposal payment in environmental cost-benefit analysis. Positive net present value offers empirical evidence of the feasibility of the sanitary landfill project. The findings show that the inclusion of environmental values in project appraisals increases the chances of implementing sanitary landfills, providing a new approach to address the environmental concerns in developing countries. Future research should consider the external costs along with the external benefits to allow for a comprehensive comparison between environmental values in environmental cost-benefit analysis.