IDEAS home Printed from https://ideas.repec.org/a/ags/saeasj/205985.html
   My bibliography  Save this article

Health Benefits and Industrial Air Pollution: A Comparison between People’s Willingness to Accept and the Opportunity Cost of Health Risk

Author

Listed:
  • Athukorala, Wasantha

Abstract

The disparity between willingness to accept (WTA) health risks and actual health risks arising from environmental pollution has not been demonstrated well in the literature. This study provides evidence on WTA for bearing existing health risks arising from environmental pollution caused by the Limestone Industry in Sri Lanka. It compares mean WTA with monthly average health expenditure as well as the opportunity cost of health risk. The study finds that the average monthly health expenditure, averting expenditure and lost earning per person were Rs. 168, Rs. 85 and Rs. 262 respectively. Accordingly, opportunity cost of the health damage was Rs. 515 while mean willingness to accept was Rs. 792 per person. Results clearly show that mean WTA estimates tends to overestimate the true cost. The study also summarizes reasons for the disparity and then discusses some of the key implications of the analysis.

Suggested Citation

  • Athukorala, Wasantha, 2013. "Health Benefits and Industrial Air Pollution: A Comparison between People’s Willingness to Accept and the Opportunity Cost of Health Risk," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 14, pages 1-17.
    • Handle: RePEc:ags:saeasj:205985
    DOI: 10.22004/ag.econ.205985
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/205985/files/3.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.205985?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Krupnick, Alan J. & Harrington, Winston & Ostro, Bart, 1990. "Ambient ozone and acute health effects: Evidence from daily data," Journal of Environmental Economics and Management, Elsevier, vol. 18(1), pages 1-18, January.
    2. Murat Isik, 2004. "Does Uncertainty Affect the Divergence between WTP and WTA Measures?," Economics Bulletin, AccessEcon, vol. 4(1), pages 1-7.
    3. Alberini, Anna & Krupnick, Alan, 1998. "Air Quality and Episodes of Acute Respiratory Illness in Taiwan Cities: Evidence from Survey Data," Journal of Urban Economics, Elsevier, vol. 44(1), pages 68-92, July.
    4. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1325-1348, December.
    5. Ostro, Bart, 1994. "Estimating the health effects of air pollutants : a method with an application to Jakarta," Policy Research Working Paper Series 1301, The World Bank.
    6. Horowitz, John K. & McConnell, Kenneth E., 2002. "A Review of WTA/WTP Studies," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 426-447, November.
    7. Willig, Robert D, 1976. "Consumer's Surplus without Apology," American Economic Review, American Economic Association, vol. 66(4), pages 589-597, September.
    8. Harrington, Winston & Portney, Paul R., 1987. "Valuing the benefits of health and safety regulation," Journal of Urban Economics, Elsevier, vol. 22(1), pages 101-112, July.
    9. Delucchi, Mark & Murphy, James & McCubbin, Donald, 2002. "The Health and Visibility Cost of Air Pollution: A Comparison of Estimation Methods," Institute of Transportation Studies, Working Paper Series qt03s2x9xb, Institute of Transportation Studies, UC Davis.
    10. Dubourg, W R & Jones-Lee, M W & Loomes, Graham, 1994. "Imprecise Preferences and the WTP-WTA Disparity," Journal of Risk and Uncertainty, Springer, vol. 9(2), pages 115-133, October.
    11. Anna Alberini & Alan Krupnick, 2000. "Cost-of-Illness and Willingness-to-Pay Estimates of the Benefits of Improved Air Quality: Evidence from Taiwan," Land Economics, University of Wisconsin Press, vol. 76(1), pages 37-53.
    12. Don L. Coursey & John L. Hovis & William D. Schulze, 1987. "The Disparity Between Willingness to Accept and Willingness to Pay Measures of Value," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(3), pages 679-690.
    13. Hanemann, W Michael, 1991. "Willingness to Pay and Willingness to Accept: How Much Can They Differ?," American Economic Review, American Economic Association, vol. 81(3), pages 635-647, June.
    14. repec:ebl:ecbull:v:4:y:2004:i:1:p:1-7 is not listed on IDEAS
    15. Shechter, M. & Kim, M., 1991. "Valuation of pollution abatement benefits: Direct and indirect measurement," Journal of Urban Economics, Elsevier, vol. 30(2), pages 133-151, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christina McGranaghan & Steven G. Otto, 2022. "Choice uncertainty and the endowment effect," Journal of Risk and Uncertainty, Springer, vol. 65(1), pages 83-104, August.
    2. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
    3. Amoah, Anthony & Ferrini, Silvia & Schaafsma, Marije, 2019. "Electricity outages in Ghana: Are contingent valuation estimates valid?," Energy Policy, Elsevier, vol. 135(C).
    4. Drayer, Joris & Shapiro, Stephen L., 2011. "An examination into the factors that influence consumers’ perceptions of value," Sport Management Review, Elsevier, vol. 14(4), pages 389-398.
    5. Sayman, Serdar & Onculer, Ayse, 2005. "Effects of study design characteristics on the WTA-WTP disparity: A meta analytical framework," Journal of Economic Psychology, Elsevier, vol. 26(2), pages 289-312, April.
    6. John K. Horowitz & Kenneth E. McConnell & James J. Murphy, 2013. "Behavioral foundations of environmental economics and valuation," Chapters, in: John A. List & Michael K. Price (ed.), Handbook on Experimental Economics and the Environment, chapter 4, pages 115-156, Edward Elgar Publishing.
    7. Edward J. Lopez & W. Robert Nelson, 2005. "The Endowment Effect in a Public Good Experiment," Experimental 0512001, University Library of Munich, Germany.
    8. Alessandro Acquisti & Leslie K. John & George Loewenstein, 2013. "What Is Privacy Worth?," The Journal of Legal Studies, University of Chicago Press, vol. 42(2), pages 249-274.
    9. Horowitz, John K. & McConnell, Kenneth E., 2002. "A Review of WTA/WTP Studies," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 426-447, November.
    10. Richard T. Carson & Miko_aj Czajkowski, 2014. "The discrete choice experiment approach to environmental contingent valuation," Chapters, in: Stephane Hess & Andrew Daly (ed.), Handbook of Choice Modelling, chapter 9, pages 202-235, Edward Elgar Publishing.
    11. Ulrich Schmidt & Stefan Traub, 2009. "An Experimental Investigation of the Disparity Between WTA and WTP for Lotteries," Theory and Decision, Springer, vol. 66(3), pages 229-262, March.
    12. Shogren, Jason F. & Cho, Sungwon & Koo, Cannon & List, John & Park, Changwon & Polo, Pablo & Wilhelmi, Robert, 2001. "Auction mechanisms and the measurement of WTP and WTA," Resource and Energy Economics, Elsevier, vol. 23(2), pages 97-109, April.
    13. Bodo Sturm & Joachim Weimann, 2006. "Experiments in Environmental Economics and Some Close Relatives," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 419-457, July.
    14. Ehrhart, Karl-Martin & Ott, Marion & Abele, Susanne, 2015. "Auction fever: Rising revenue in second-price auction formats," Games and Economic Behavior, Elsevier, vol. 92(C), pages 206-227.
    15. Richard Carson & Nicholas Flores & Norman Meade, 2001. "Contingent Valuation: Controversies and Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(2), pages 173-210, June.
    16. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    17. William S. Neilson & Michael McKee & Robert P. Berrens, 2013. "Value and outcome uncertainty as explanations for the WTA vs WTP disparity," Chapters, in: John A. List & Michael K. Price (ed.), Handbook on Experimental Economics and the Environment, chapter 6, pages 171-189, Edward Elgar Publishing.
    18. repec:ebl:ecbull:v:4:y:2004:i:1:p:1-7 is not listed on IDEAS
    19. Andrea Isoni, 2011. "The willingness-to-accept/willingness-to-pay disparity in repeated markets: loss aversion or ‘bad-deal’ aversion?," Theory and Decision, Springer, vol. 71(3), pages 409-430, September.
    20. Zhao, Jinhua & Kling, Catherine L., 2001. "A new explanation for the WTP/WTA disparity," Economics Letters, Elsevier, vol. 73(3), pages 293-300, December.
    21. Knetsch, Jack L., 2007. "Biased valuations, damage assessments, and policy choices: The choice of measure matters," Ecological Economics, Elsevier, vol. 63(4), pages 684-689, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:saeasj:205985. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/slaeaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.