Abstract
This study examines the willingness to pay (WTP) for the highland agriculture restriction policy which aims to stabilize the water quality in the Han River basin, South Korea. To estimate the WTP, we use a double-bounded contingent valuation method and a random-effects interval-data regression. We extend contingent valuation studies by dealing with the potential preference anomalies (shift, anchoring, and inconsistent response effects). The result indicates that after the preference anomalies are corrected, the statistical precision of parameter estimates is improved. After correcting the potential preference anomalies, estimated welfare gains are on average South Korean currency (KRW) 2,861 per month per household. Based on the WTP estimate, the total benefits from the land use restriction policy are around KRW 297.73 billion and the total costs are around KRW 129.44 billion. The net benefit is, thus, around KRW 168.29 billion. This study suggests several practical solutions that would be useful for the water management. First, a priority should be given to the valid compensation for the highland farmers’ expected income loss. Second, it is necessary to increase in the unit cost of the highland purchase. Third, wasted or inefficiently used costs (e.g., overinvestment in waste treatment facilities, and temporary upstream community support) should be transferred to the program associated with high mountainous agriculture field purchase. Results of our analysis support South Korean legislators and land use policy makers with useful information for the approval and operationalization of the policy.
Highlights
Degradation of water quality is an ongoing issue for water resource users between high- and lowland areas [1]
Even though several measures including the introduction of a water use charge (water users in downstream areas (Seoul, Incheon, and part of Gyeonggi_do) that are supplied with water from upstream water source protection zones of the Han River basin have to pay a water use charge, which has been increased from KRW 80 per cubic meter in 1999 to KRW 170 per cubic meter in 2012 [14] (KRW is the currency unit of South Korea and, at the time of the survey, USD 1 equaled KRW 1,126.25) as an incentive to designate water source protection zones in upstream areas since 1975 have been implemented, water quality deterioration due to highland agricultural activities still continues
In the contingent valuation survey, the responses of household head or their spouse are very important because they directly make it possible for the researcher to achieve a better idea about the variables that affect their true willingness to pay (WTP) and explain differences in consumption behavior regarding goods and services [82]
Summary
Degradation of water quality is an ongoing issue for water resource users between high- and lowland areas [1]. Due to leaching of agrochemicals and the export of sediments caused by agricultural intensification in the highland areas, water pollution is very common along the river basin in East and Southeast Asian countries [2,3,4,5,6,7] This results in degrading water quality, threatening aquatic ecosystems in downstream areas [8,9]. Downstream water users have called for a highland agricultural restriction policy including the abolishment of highland vegetable cultivation [15] Such crop production is the main source of income for local farmers in the highland areas [16]. The current situation is that the Korean government and downstream residents support stopping agricultural activities susceptible to environmental problems, while highland farmers and local governments wish to continue these activities
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