Mushtaq Ahmed Memon

Validity of contingent valuation estimates from developing countries: scope sensitivity analysis

In developing countries contingent valuation (CV) has become an important tool for estimating willingness to pay (WTP). So far, however, the CV studies usually have not assessed the validity of the WTP estimates mainly due to ambiguities in the criteria for scope sensitivity analysis. In this article we clarify the criteria from theoretical and empirical aspects. The main debate on scope sensitivity analysis targets the proportionality theory: One group supports strong proportionality, and the other group supports weak proportionality. We highlight the shortcomings of strong proportionality and support weak proportionality. We set up the criteria for statistical significance and plausible responsiveness between the WTP and its explanatory variables. We conducted scope sensitivity of our case study from rural Pakistan to show its applicability in developing countries and to test the validity of our WTP estimates. Statistical analysis, based on the maintained hypothesis, reveals that the magnitude of the benefits and per capita income are significant variables that influence the WTP. The Kruskall-Wallis test reconfirmed the significance of the size of the benefits. Plausible responsiveness is evident from the influence of the household characteristics over the WTP. Finally, we concluded that CV can provide valid results in developing countries if the survey is conducted according to the mainstream guidelines. Further empirical testing is required to support the criterion of plausible responsiveness.

Cost benefit analysis of the sulfur dioxide emissions control policy in Japan

This study attempted to examine the economic efficiency of the sulfur dioxide (SO2) emissions control policy in Japan using a cost-benefit analysis (CBA). The SO2 emissions control policy is divided into three stages by epochal policy decisions. Reducing the incidence of chronic bronchitis and asthma are the two main policy benefits considered in this study, and they are estimated mainly based on the cost of illness approach. Policy costs have been derived from private sector investments for pollution control to meet the pollution standards under command and control (CAC) regulations. The estimated results, using a social discount rate of 2.5%, indicate a cost-benefit ratio of 5.39 in stage 1 (1968–1973), 1.18 in stage 2 (1974–1983), and 0.41 in stage 3 (1984–1993). This result indicates that the CAC in Japan used to have strong efficiency but that this efficiency has decreased over time. Our paper suggests that it is necessary to reconsider policy approaches in light of policy efficiency and in moving from SO2 to new target priority pollutants.