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A more comprehensive estimate of the value of water quality

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  • Kuwayama, Yusuke
  • Olmstead, Sheila
  • Zheng, Jiameng

Abstract

The estimated marginal cost of U.S. water pollution control often exceeds its marginal benefit. We provide intuition, theory and empirical evidence suggesting that the hedonic property model—a common revealed-preference approach to valuing pollution control—may not capture water’s recreational benefits. Using the case of Tampa Bay, Florida, we estimate willingness to pay (WTP) for water quality improvements by combining a recreation demand model with a hedonic property model. Results indicate that homeowners have significant WTP for both local and regional recreational water quality improvements and suggest that prior hedonic studies may underestimate the benefits of water pollution control.

Suggested Citation

  • Kuwayama, Yusuke & Olmstead, Sheila & Zheng, Jiameng, 2022. "A more comprehensive estimate of the value of water quality," Journal of Public Economics, Elsevier, vol. 207(C).
    • Handle: RePEc:eee:pubeco:v:207:y:2022:i:c:s0047272722000020
    DOI: 10.1016/j.jpubeco.2022.104600
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