Measuring the economic benefits of an environmental monitoring satellite project: The value of information approach

Abstract

This paper reports a first application of contingent valuation method to measure the value of information generated by earth science data from an environmental geostationary satellite payload called Geostationary Environmental Monitoring Satellite. The purpose of the space project is to improve the accuracy of air pollution information by enhancing air pollution monitoring and forecasting system coupled with conventional ground level monitoring stations located throughout South Korea.Estimation results based on a survey data of 1000 households show that most explanatory variables including bid amounts and household income significantly influenced dichotomous choice contingent valuation responses with expected signs. When applied to the whole sample, mean willingness to pay reflecting both use and non-use values was stable at around $3.70 per year for the improvement of air quality information. Present values of total benefits over the lifetime period of the space satellite exceed the cost born by tax payers with a benefit-cost ratio of 2.77. The result of this study clearly suggests that contingent valuation method can be used as an alternative approach in measuring the value of information from a space-derived earth science project.