THE FEASIBILITY OF CONTINGENT VALUATION METHOD IN ECONOMIC VALUATION OF ENVIRONMENT IN CHINA: A CASE STUDY OF THE RESIDENTS’WILLINGNESS TO PAY IN BEIJING

Abstract

This paper started from the basic concepts and advantages of the contingent valuation method (CVM),and briefly analyzed the limitations of this method when used in developing country. Based on summarizing the previous research results in China, we analyzed the method and result of a survey, which aimed at finding out the residents' willingness to pay (WTP) for improving air quality in Beijing by using CVM. The result indicated that the residents' mean WTP for a 50% reduction of the current concentration of pollution substances in the air was 143 Yuan per household and per year, and the total WTP of the residents in the research area was 336 million Yuan per year. According to statistical average income level of the sample household, WTP was about 0.7%～ 0.8% of annual income of one family. The amount of accepted questionnaires was 91.4% and among them 70.3% respondents showed that they completely or almost completely understand the questionnaire. This demonstrated that the survey was successful. The feasibility of CVM in economic valuation of environment in China was discussed. It is concluded that the potential application prospect of this method in China is optimistic. CVM can be reliably used to estimate the value of improved environmental quality in big cities of China by carefully designing the survey. This study also indicates that based on the increased income and improved environmental awareness, people are willing to pay for the improved environmental quality. WTP measures are important for policy makes when deciding about public investments and policy instrument in order to control environmental pollution. Some suggestions for the application of CVM in the future were pointed out at the end of the paper.