Choice modeling of system-wide or large scale environmental change in a developing country context: Lessons from the Paraíba do Sul River

Abstract

The Rio Paraiba do Sul is a highly polluted river in south central Brazil, that is contaminated by industrial, agricultural and municipal wastes, as well as being impacted by dams, water withdrawals and deforestation in the watershed. Since only very intensive and farreaching environmental policies could result in water quality improvements, valuing the restoration of the river presents many unique challenges. We develop a choice-modeling approach to valuation of the restoration of this river, with general tightening of environmental policy as the policy, and an increase in prices as the payment vehicle. The estimation is performed in willingness to pay space, adjusting for heterogeneity of tastes. We find that respondents, who are primarily low income, exhibit higher willingness to pay for complete restoration than moderate restoration, higher for moderate restoration in comparison to minimal restoration, and that they prefer restoration sooner, rather than later.