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Alternative approach to combining revealed and stated preference data: evaluating water quality of a river system in Taipei

Author

Listed:
  • Daigee Shaw

    (National Chung Hsing University
    Academia Sinica)

  • Yu-Lan Chien

    (Chung-Hua Institution for Economic Research)

  • Yih-Ming Lin

    (Soochow University)

Abstract

This paper combines data from a double-bounded referendum contingent valuation survey and a travel cost survey. Rather than linking the two data sets through a common utility function, as in Cameron (1992) and Niklitschek and Leon (1996), we link them through the expenditure difference function. By using the expenditure difference approach, the parameters and their standard errors for individual preferences can be easily extracted, and the trip demand function and exact welfare measure of quality improvements can be estimated. This approach is illustrated in a case study that evaluates the benefits resulting from water quality improvements in the Tamshui river system in the Taipei Metropolitan Area of Taiwan. The empirical estimation results show that the use value becomes much larger when the water quality improves to a higher level. In addition, the nonuse value makes up a large share of the total value of improving water quality; thus the nonuse value could be crucial for examining projects aimed at improving the water quality of the four rivers in the Tamshui river system.

Suggested Citation

  • Daigee Shaw & Yu-Lan Chien & Yih-Ming Lin, 1999. "Alternative approach to combining revealed and stated preference data: evaluating water quality of a river system in Taipei," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 2(2), pages 97-112, June.
    • Handle: RePEc:spr:envpol:v:2:y:1999:i:2:d:10.1007_bf03353905
    DOI: 10.1007/BF03353905
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    References listed on IDEAS

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