Economic Evaluation of Snow-Removal Level by Contingent Valuation Method

Abstract

The road management department of the city of Sapporo has improved the service level of winter road management year by year, and its current annual budget is $100 million. In the cost-benefit evaluation of winter road management, conventional studies have not included as evaluation subjects the indirect benefits, such as improvement in quality of life (an increase in pedestrian accessibility, safety, and walkability), other than benefits for traffic markets. The contingent valuation method (CVM) was adopted to include the indirect benefits in the evaluation. The results of the cost-benefit evaluation by applying CVM are described, and facts that should be taken into consideration in CVM application are discussed. Benefits of the development of winter road management levels were estimated by multiplying willingness to pay (WTP) and willingness to accept compensation (WTA) by the number of households in Sapporo (752,267 in February 1998). In the case of deteriorated winter road management level, WTP was $27 million to $33 million, and WTA was $190 million to $300 million. In the case of improved level, WTP was $17 million to $23 million, and WTA was $180 million to $200 million. The estimation results varied greatly depending on means of payment to the questioned value. This indicated that a careful examination of the suitability of the questioning method, whether WTA or WTP, is required.