Abstract
This two-part study investigates household preferences and willingness to pay (WTP) for water quality improvement of the Swat River in Pakistan. First, a four-point Likert scale was used to rank preferences for water quality benefits without using any financial metric. Results show that households have comparatively strong preferences for non-use benefits. Second, a contingent valuation question was designed to determine WTP for adopting a management plan developed exclusively for water quality improvement in the Swat River. The estimated annual mean WTP per household for water quality improvement is $2.40 when donating to an NGO. Generalizing this value to households living in Swat Valley would generate up to $544,000 per year. The present value aggregate benefit for 15 years would be sufficient to cover the present value of aggregate costs to adopt the management plan. A mandatory program that would require paying for the management plan generates half the WTP compared to the voluntary plan, but is still sufficient to cover costs and may be more feasible than a voluntary program because payment is assured.
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Notes
Stratum-1 (River Swat Valley) was divided into District Swat, Malakand and Lower Dir, and two of them (District Swat and Malakand) were selected randomly for sample selection. Similarly, stratum-2 (downstream region irrigated by Swat River) was divided into District Mardan, District Charsada and District Swabi. Out of these three, District Mardan was randomly selected for sampling.
Environmental Protection Society (EPS), LASOONA Society of Human and Natural Resource Development and the Integrated Rural Support Program (IRSP) are well-known local NGOs.
Most development banks and developing countries use 12 % discount rate. In Pakistan, the Ministry of Planning and Development use 10–12 % social discount rate. CVM studies in developed countries have used discount rate in the range of 0–9 %. The high discount rate for environmental goods encourages public to underestimate the importance of future benefit, and also demonstrates that humans should take action on environmental restoring and protection as soon as possible.
The estimated present value total cost on the designed management program was Rs. 274,000,000 ($2880,000). It was determined through an entirely different study (that was part of the first author’s dissertation) that we do not have space to explain here.
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Shah, S.A., Hoag, D.L.K. & Davies, S. Household preferences and willingness to pay (WTP) for freshwater quality improvement in Pakistan’s Swat River Valley. Environ Dev Sustain 18, 1081–1093 (2016). https://doi.org/10.1007/s10668-015-9687-1
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DOI: https://doi.org/10.1007/s10668-015-9687-1