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Valuing water quality improvement in China : a case study of lake Puzhehei in Yunnan province

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  • Wang, Hua
  • Shi, Yuyan
  • Kim, Yoonhee
  • Kamata, Takuya

Abstract

While polluted surface water is encountered across most of China, few economic valuation studies have been conducted on water quality changes. Limited information about the economic values associated with those potential water quality improvements or deteriorations is a disadvantage for making proper choices in water pollution control and clean-up activities. This paper reports an economic valuation study conducted in Yunnan, China, which aims to estimate the total value of a real investment project to improve the water quality of Lake Puzhehei by one grade level. Located in Qiubei County, which is far from large cities, the lake has been experiencing fast water quality deterioration in the past years. A conservative estimation strategy shows that on average a household located in Qiubei County is willing to pay about 30 yuan per month continuously for 5 years for water quality improvement, equivalent roughly to 3 percent of household income. The elasticity of willingness-to-pay with respect to income is estimated to be 0.21. The economic rate of return of the proposed project is estimated to be 18 percent, indicating a strong demand and high efficiency of investment in water quality improvement in China. This study also demonstrates that previous knowledge about water quality changes and the project may have a significant positive impact on people's valuation, and that the interviewer effect on valuation can be negative.

Suggested Citation

  • Wang, Hua & Shi, Yuyan & Kim, Yoonhee & Kamata, Takuya, 2011. "Valuing water quality improvement in China : a case study of lake Puzhehei in Yunnan province," Policy Research Working Paper Series 5766, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5766
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    Cited by:

    1. Hua Wang & Jie He & Desheng Huang, 2018. "Valuation Biases Caused by Public Distrust: Identification and Calibration with Contingent Valuation Studies of Two Air Quality Improvement Programs in China," Cahiers de recherche 18-05, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    2. Moritz A. Drupp, 2018. "Limits to Substitution Between Ecosystem Services and Manufactured Goods and Implications for Social Discounting," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(1), pages 135-158, January.
    3. Stefan Baumgärtner & Alexandra Klein & Denise Thiel & Klara Winkler, 2015. "Ramsey Discounting of Ecosystem Services," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(2), pages 273-296, June.
    4. Mueller, Hannah & Hamilton, David P. & Doole, Graeme J., 2016. "Evaluating services and damage costs of degradation of a major lake ecosystem," Ecosystem Services, Elsevier, vol. 22(PB), pages 370-380.
    5. Zhang, Xin & Zhang, Xiaobo & Chen, Xi, 2017. "Valuing Air Quality Using Happiness Data: The Case of China," Ecological Economics, Elsevier, vol. 137(C), pages 29-36.
    6. Pan, Yuan & Marshall, Stuart & Maltby, Lorraine, 2016. "Prioritising ecosystem services in Chinese rural and urban communities," Ecosystem Services, Elsevier, vol. 21(PA), pages 1-5.
    7. Jian Chang & Wanhua Li & Yaodong Zhou & Peng Zhang & Hengxin Zhang, 2022. "Impact of Public Service Quality on the Efficiency of the Water Industry: Evidence from 147 Cities in China," Sustainability, MDPI, vol. 14(22), pages 1-17, November.
    8. Ahlheim, Michael & Börger, Tobias & Frör, Oliver, 2012. "The ecological price of getting rich in a green desert: A contingent valuation study in rural Southwest China," FZID Discussion Papers 55-2012, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    9. Baumgärtner, Stefan & Drupp, Moritz A. & Meya, Jasper N. & Munz, Jan M. & Quaas, Martin F., 2017. "Income inequality and willingness to pay for environmental public goods," Journal of Environmental Economics and Management, Elsevier, vol. 85(C), pages 35-61.
    10. Dupoux, Marion & Martinet, Vincent, 2022. "Could the environment be a normal good for you and an inferior good for me? A theory of context-dependent substitutability and needs," Resource and Energy Economics, Elsevier, vol. 69(C).
    11. Baumgärtner, Stefan & Drupp, Moritz A. & Meya, Jasper N. & Munz, Jan M. & Quaas, Martin F., 2016. "Income inequality and willingness to pay for public environmental goods," Economics Working Papers 2016-04, Christian-Albrechts-University of Kiel, Department of Economics.
    12. Wang, Hua & He, Jie & Huang, Desheng, 2020. "Public distrust and valuation biases: Identification and calibration with contingent valuation studies of two air quality improvement programs in China," China Economic Review, Elsevier, vol. 61(C).
    13. Tavárez, Héctor & Elbakidze, Levan, 2021. "Urban forests valuation and environmental disposition: The case of Puerto Rico," Forest Policy and Economics, Elsevier, vol. 131(C).

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    Keywords

    Water and Industry; Environmental Economics&Policies; Water Supply and Sanitation Governance and Institutions; Town Water Supply and Sanitation; Water Supply and Systems;
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