Value estimates of water quality improvement using the double bounded dichotomous choice contingent valuation format: A case study for Yangtze River, China

Abstract

This paper uses a double bounded dichotomous choice(DBDC) contingent valuation method(CVM) to estimate the willingness to pay(WTP) for water quality improvement of the Yangtze River in Nanjing in China. To improve the validity, special attention is paid to the issue of zero responses, and a Spike model that allowed for a non-zero probability of zero WTP is applied. Results indicate that there are significant positive values derived from the water quality improvement in Nanjing city, China. With protest responses being excluded, the WTP for each household is CNY260.7 (USD38.2) per year. Aggregating over the whole target population, it yields a benefit of CNY524.0 million (USD76.8 million) per year. If protest responses are treated as true zeros, estimation yields a WTP of CNY118.1, coupled with an aggregated benefit of CNY237.4 million (USD37.8 million) per year. At the practical level, considering the heterogeneous acceptability and the burden of water expenditure, special attention needs to be paid to the low-income families.