Introducing a conditional 'Willingness to Pay' index as a quantifier for environmental impact assessment

Abstract

The optimal concentration Copt of a pollutant in the environment can be determined as an equilibrium point in the trade off between (i) environmental cost, due to impact on man/ecosystem/economy, and (ii) economic cost for environmental protection, as it can be expressed by Pigouvian tax. These two conflict variables are internalized within the same techno-economic objective function of total cost, which is minimized. In this work, the first conflict variable is represented by a Willingness To Pay (WTP) index. A methodology is developed for the estimation of this index by using fuzzy sets to count for uncertainty. Implementation of this methodology is presented, concerning odor pollution of air round an olive pomace oil mill. The ASTM E544-99 (2004) 'Standard Practice for Referencing Suprathreshold Odor Intensity' has been modified to serve as a basis for testing, while a network of the quality standards, required for the realization/application of this 'Practice', is also presented. Last, sensitivity analysis of Copt as regards the impact of (i) the increase of environmental information/sensitization and (ii) the decrease of interest rate reveals a shifting of Copt to lower and higher values, respectively; certain positive and negative implications (i.e., shifting of Copt to lower and higher values, respectively) caused by socio-economic parameters are also discussed.