Integrating environmental impact, contingent valuation and cost-benefit analysis: empirical evidence for an alternative perspective

Abstract

The non-market nature of water quality improvement in rivers hinders the use of traditional cost-benefit analysis (CBA) to measure the efficiency of investments. Substantial investments have been made to clean up contaminated river water with little comparison of the costs or environmental impact (EI) with future benefits. Water quality impact models are used in this study to predict the impact of discharges on downstream water quality. Contingent valuation (CV) is used to measure the total value, including use and non-use, of river water quality improvement. This provides the benefit side of the cost-benefit equation. The method outlined provides a tool to evaluate investment on environmental improvement integrating EI and CV in CBA.