Evaluating non-market costs of ICT involving data transmission in smart cities

Abstract

ABSTRACT Smart cities are spurred by rapid development of Information and Communication Technologies (ICTs). Cost justification has been a challenging but essential decision-making aspect for smart city projects. Whilst market costs are measurable, non-market costs are often obscure and even intangible. The adverse effects on individuals arising from ICT services are usually underestimated due to the exclusion of intangible elements. This study is devoted to the non-market costs of ICT to users (i.e. Privacy leak, Cyber-attack, Non-availability, and Impediment) and non-users (due to Digital divide) in smart cities. Contingent Valuation is conducted on representative ICT services in Hong Kong which is an emerging smart city. Ordinal regression is adopted to calculate Willingness-to-Pay (WTP) for avoiding detriments as the proxy of non-market cost. The results indicate that the WTPs increase with data input needs. Information overload is remarkable in smart cities. Age is identified as a significant determinant through a discussion of influential factors of WTP. The impacts of Age on digital divide are studied with further insights through supplementary interviews. The estimated non-market costs should be incorporated into the Cost–Benefit Analysis of smart city projects for decision-making. Accordingly, policy recommendations on ICT use and security are provided for smart city managers.