Chapter 5 Estimating Social Benefits of Environmental Improvements from Reduced Acid Depositions: A Contingent Valuation Survey

Abstract

This chapter presents several results of a survey estimating the Norwegian population's willingness-to-pay (WIT) for these predicted increments in freshwater populations. This survey is the core of an empirical follow-up study based on a methodological “package” proposed in a pilot project. The total economic value to society of a marginal increase in this non-market environmental good (freshwater fish populations in Norway) can be estimated as the aggregate, maximum, total WTP for all people affected by this environmental improvement. They are defined as all of the 1.52 million households in Norway (Central Bureau of Statistics 1987). This estimated value constitutes a very significant part of the welfare improvement to the Norwegian population obtainable through reductions in long range transported air pollutants. Economists apply a variety of techniques to reveal individual preferences for non-market environmental commodities. These can be divided into two major groups: indirect and direct methods. The indirect methods assume either that private goods are complementary to environmental goods, or that the environmental quality is incorporated in the private good. The value of the environmental good can thus be calculated from the demand for the private good. The direct methods use interview techniques to make individuals express their subjective evaluation of the good explicitly in constructed hypothetical markets.