Willingness to pay to avoid mining with adverse externalities

Abstract

ABSTRACT This paper is one of the very few to use the discrete choice experiment method (DCEM) to estimate the nonmarket values of the impacts on the environmental and health related to mining activities in a developing country. We show that the local population that live close to the mining sites is willing to contribute relatively high levels of money or working hours to avoid mining projects using open pits as their exploitation technology and having important adverse impacts on residents’ environment and health. This study is also one the first to apply the DCEM on the mining setting, to analyse the welfare differences between two contribution modes, money and working hours, and to use the mixed-logit model in this context. We found that the willingness to pay with money, relative to the willingness to work, is not downward biased, a concern in the related literature considering developing countries. To prevent social conflicts, mining companies and governments need to consider the high value that local populations assign to avoid mining with adverse attributes. Such conflicts are costly for mining companies, local populations and countries.