nep-dcm New Economics Papers
on Discrete Choice Models
Issue of 2009‒06‒10
three papers chosen by
Philip Yu
Hong Kong University

  1. Identifying Preferences under Risk from Discrete Choices By Pierre-Andre Chiappori; Amit Gandhi; Bernard Salanie; Francois Salanie
  2. Estimating the value of improved wastewater treatment: The case of River Ganga, India By Sukanya Das; Rabindra N. Bhattacharya; Ekin Birol
  3. Preferences for domestic water services in the Middle Olifants sub-basin of South Africa By Kloos, Julia; Tsegai, Daniel W.

  1. By: Pierre-Andre Chiappori; Amit Gandhi; Bernard Salanie; Francois Salanie
    Date: 2009–05
  2. By: Sukanya Das; Rabindra N. Bhattacharya; Ekin Birol (Department of Land Economy, University of Cambridge)
    Abstract: This paper employs a stated preference environmental valuation method, namely the choice experiment method, to estimate local public’s willingness to pay (WTP) for improvements in the capacity of a sewage treatment plant (STP) in Chandernagore Municipality, located on the banks of the River Ganga. A pilot choice experiment study is conducted with 100 randomly selected Chandernagore residents and the data are analysed using the conditional logit model. The results reveal that residents of this municipality are WTP significant amounts in terms of higher monthly municipality taxes, in order to upgrade the capacity of the current STP to one that treats higher quantities of wastewater and at a higher quality, before discarding in the Ganga. With the use of the benefits transfer method, the results of this case study can provide information on the economic benefits that might be generated through the improvement of STPs in other similar municipalities located along the banks of the Ganga. Overall, the results reported in this paper have important policy implications for reducing pollution, and hence environmental and health risks that are currently threatening the sustainability of the economic, cultural and religious values this sacred river generates.
    Keywords: choice experiment method, conditional logit model, River Ganga, sewage treatment plant, water quality, water quantity
    Date: 2009
  3. By: Kloos, Julia; Tsegai, Daniel W.
    Abstract: Using household survey data, this study investigates preferences for domestic water services in the Middle Olifants sub-basin of South Africa. Water is a relative scarce resource in South Africa that is distributed unevenly both geographically and seasonally as well as socio-politically. For a water management addressing the policy objectives of efficiency in use, equity in access and benefits and long-term sustainability, economic valuation of the different water uses is required. In order to detect households' preferences, a choice experiment was conducted. Results suggested the presence of preference heterogeneity and therefore, a latent class model was applied, dividing households into homogeneous groups according to their preferences. Four distinct groups of households could be found which differ significantly in terms of their socio-economic characteristics, their attitudes toward pricing of water and their satisfaction with current water service levels. Willingness to pay (WTP) estimates of different water service characteristics in all groups indicate that households are willing to pay higher prices for a better and more reliable water services provision. But the amount households are willing to pay differs among the groups. This information is helpful for policy-makers to enable the design of water services in the Middle Olifants according to preferences of local households. Besides, WTP estimation can provide a basis for setting water tariffs.
    Keywords: Environmental Economics and Policy,
    Date: 2009–05

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