Individual and household willingness to pay for public goods

The issue of whether willingness to pay (WTP) for the benefits generated by a public good should be elicited on an individual or on a household basis is addressed. Differences between individual and household WTP may arise when members of the household are mutually altruistic. It is shown that, for general specifications of altruism, household WTP is less than the sum of household members' individual WTP. Implications for the choice between household and individual measures of WTP are considered, and issues in the elicitation of household WTP are addressed.

Public health implications of new guidelines for lead in drinking water: a case study in an area with historically high water lead levels

Concern about the neurotoxicity of lead, particularly in infants and young children, has led to a revision of blood lead levels which are considered to involve an acceptable level of human exposure. Drinking water guidelines have also been reviewed in order to reduce this source of population exposure to lead. In the last 20 years, guidelines have been reduced from 100 to 50 to 10 mu g/litre. Lead in tap water used to be a major public health problem in Glasgow because of the high prevalence of houses with lead service pipes, the low pH of the public water supply and the resulting high levels of lead in water used for public consumption. Following two separate programmes of water treatment, involving the addition of lime and, a decade later, lime supplemented with orthophosphate, it is considered that maximal measures have been taken to reduce lead exposure by chemical treatment of the water supply. Any residual problem of public exposure would require large scale replacement of lead service pipes. In anticipation of the more stringent limits for lead in drinking water, we set out to measure current lead exposure From tap water in the population of Glasgow served by the Loch Katrine water supply. to compare the current situation with 12 years previously and to assess the public health implications of different limits. The study was based on mothers of young children since maternal blood lead concentrations and the domestic water that mothers use to prepare bottle feeds are the principal sources of foetal and infant lead exposure. An estimated 17% of mothers lived in households with tap water lead concentrations of 10 mu g/litre (the WHO guideline) or above in 1993 compared with 49% in 1981. Mean maternal blood lead concentrations fell by 69% in 12 years. For a given water lead concentration, maternal blood lead concentrations were 67% lower. The mean maternal blood lead concentration was 3.7 mu g/litre in the population at large, compared with 3.3 mu g/litre in households with negligible or absent tap water lead. Nevertheless, between 63% and 76% of cases of mothers with blood lead concentrations of 10 mu g/dl or above were attributable to tap water lead. The study found that maternal blood lead concentrations were well within limits currently considered safe for human health. About 15% of infants may be exposed via bottle feeds to tap water lead concentrations that exceed the WHO guideline of 10 mu g/litre. In the context of the health and social problems which affect the well-being and development of infants and children in Glasgow, however, current levels of lend exposure are considered to present a relatively minor health problem. (C) 2000 Elsevier Science Ltd. All rights reserved.

Policies for saving a rare Australian glider: economics and ecology

This paper considers the economics of conserving a species with mainly non-use value, the endangered mahogany glider. Three serial surveys of Brisbane residents provide data on the knowledge of respondents about the mahogany glider. The results supply information about the attitudes of respondents to the mahogany glider, to its conservation and relevant public policies, and about variations in these factors as the knowledge of participants of the mahogany glider alters. Similarly, data are provided and analysed about the willingness to pay of respondents to conserve the mahogany glider and how it changes. Population viability analysis is applied to estimate the required habitat area for a minimum viable population of the mahogany glider to ensure at least a 95% probability of its survival for 100 years. Places are identified in Queensland where the requisite minimum area of critical habitat can be conserved. Using the survey results as a basis, the likely willingness of groups of Australians to pay for the conservation of the mahogany glider is estimated and consequently their willingness to pay for the minimum required area of its habitat. Methods for estimating the cost of protecting this habitat are outlined. Australia-wide benefits are estimated to exceed the costs. Establishing a national park containing the minimum viable population of the mahogany glider is an appealing management option. This would also be beneficial in conserving other endangered wildlife species and ecosystems. Therefore, additional economic benefits to those estimated on account of the mahogany glider itself can be obtained. (C) 2004 Elsevier Ltd. All rights reserved.

Dynamic processes in contingent valuation: A case study involving the mahogany glider

This paper reports the results of an experiment involving a sample of 204 members of the public who were assessed on three occasions about their willingness to pay for the conservation of the mahogany glider. They were asked this question prior to information being provided to them about the glider and other focal wildlife species; after such information was provided, and finally after participants had had an opportunity to see live specimens of this glider. The mean willingness to pay of the relevant samples are compared and found to show significant variations. Theories are considered that help explain the dynamics of these variations. Serious concerns are raised about the capacity of information provision to reveal ‘true’ contingent valuations of public goods.

The land assembly problem revisited

As in the standard land assembly problem, a developer wants to buy two adjacent blocks of land belonging to two different owners. The value of the two blocks of land to the developer is greater than the sum of the individual values of the blocks for each owner. Unlike the land assembly literature, however, our focus is on the incentive that each lot owner has to delay the start of negotiations, rather than on the public goods nature of the problem. An incentive for delay exists, for example, when owners perceive that being last to sell will allow them to capture a larger share of the joint surplus from the development. We show that competition at point of sale can cause equilibrium delay, and that cooperation at point of sale will eliminate delay. This suggests that strategic delay is another source for the inefficient allocation of land, in addition to the public-good type externality pointed out by Grossman and Hart [Bell Journal of Economics 11 (1980) 42] and O'Flaherty [Regional Science and Urban Economics 24 (1994) 287]. (C) 2004 Elsevier B.V. All rights reserved.

Dynamic processes in the contingent valuation of an endangered mammal species

Reports experimental results involving 204 members of the public who were asked their willingness to pay for the conservation of the mahogany glider Petaurus gracilis on three occasions: prior to information being provided to them about the glider and other wildlife species; after such information was provided, and after participants had an opportunity to see live specimens of this endangered species. Variations in the mean willingness to pay are analysed. Concerns arise about whether information provision and experience reveal ‘true’ contingent valuations of public goods and about the choice of the relevant contingent valuation measure.

The effect of provocation in the form of mild erotica on attitude to the ad and corporate image: Differences between cause-related and product-based advertising

Provocative advertising is characterized by a deliberate attempt to gain attention through shock. This research investigates the reactions of individuals to a provocative appeal for a cause as opposed to a provocative advertisement for a standard consumer product, using mild erotica as the element of provocative imagery. An experiment using 391 adult subjects was conducted, and two analyses were performed. The first examined the effect of stimulus type (mildly erotic/nonerotic) by product category (cause appeal/consumer product) on attitude to the ad. The second examined the effect of stimulus type (mildly erotic/nonerotic) by cause (AIDS [acquired immunodeficiency syndrome]/SIDS [sudden infant death syndrome]) on corporate image. Both analyses also included gender as a third independent variable. The results suggest that people prefer mildly erotic ads generally, that an organization using mild erotica in appeals for a cause will be viewed more favorably where the erotica is congruent with the cause, and that women may be more responsive to mild erotica in cause appeals than are men.

Random error in willingness to pay measurement: A multiple indicators, latent variable approach to the reliability of contingent values

The reliability of measurement refers to unsystematic error in observed responses. Investigations of the prevalence of random error in stated estimates of willingness to pay (WTP) are important to an understanding of why tests of validity in CV can fail. However, published reliability studies have tended to adopt empirical methods that have practical and conceptual limitations when applied to WTP responses. This contention is supported in a review of contingent valuation reliability studies that demonstrate important limitations of existing approaches to WTP reliability. It is argued that empirical assessments of the reliability of contingent values may be better dealt with by using multiple indicators to measure the latent WTP distribution. This latent variable approach is demonstrated with data obtained from a WTP study for stormwater pollution abatement. Attitude variables were employed as a way of assessing the reliability of open-ended WTP (with benchmarked payment cards) for stormwater pollution abatement. The results indicated that participants' decisions to pay were reliably measured, but not the magnitude of the WTP bids. This finding highlights the need to better discern what is actually being measured in VVTP studies, (C) 2003 Elsevier B.V. All rights reserved.

The net benefit of saving the Asian elephant: a policy and contingent valuation study

Reports results from a contingent valuation (CV) survey of willingness to pay (WTP) for the conservation of the Asian elephant of a sample of urban residents living in three selected housing schemes in Colombo, the capital of Sri Lanka. Face-to-face surveys were conducted using an interview schedule (IS). A non-linear logit regression model is used to analyse the respondents' responses for the payment principle questions and to identify the factors that influence their responses. We investigate whether urban residents' WTP for the conservation of elephants is sufficient to compensate farmers for the damage caused by elephants. We find that the beneficiaries (the urban residents) could compensate losers (the fanners in the areas affected by human-elephant conflict, HEC) and be better off than in the absence of elephants in Sri Lanka. Therefore, there is a strong economic case for the conservation of the wild elephant population in Sri Lanka. However, we have insufficient data to determine the optimal level of this elephant population in the Kaldor-Hicks sense. Nevertheless, the current population of elephant in Sri Lanka is Kaldor-Hicks preferable to having none. (C) 2003 Elsevier B.V. All rights reserved.

Impact of increasing the re-supply interval on the seasonality of subsidised prescription use in Australia

Objective: To evaluate the impact of increasing the minimum resupply period for prescriptions on the Pharmaceutical Benefits Scheme (PBS) in November 1994. The intervention was designed to reduce the stockpiling of medicines used for chronic medical conditions under the PBS safety net. Methods: Interrupted times series regression analyses were performed on 114 months of PBS drug utilisation data from January 1991 to June 2000. These analyses assessed whether there had been a significant interaction between the onset of the intervention in November 1994 and the extreme levels of drug utilisation in the months of December (peak utilisation) and January (lowest utilisation) respectively. Both serial and 12-month lag autocorrelations were controlled for. Results: The onset of the intervention was associated with a significant reduction in the December peak in drug utilisation; after the introduction of the policy there were 1,150,196 fewer proscriptions on average or that month (95% Cl 708,333-1,592,059). There was, however, no significant change in the low level of utilisation in January. The effect of the policy appears to be decreasing across successive postintervention years. though the odds of a prescription being dispensed in December remained significantly lower in 1999 compared to each of the pre-intervention years (11% vs. 14%) Conclusion: Analysis of the impact of increasing the re-supply period for PBS prescriptions showed that the magnitude of peak utilisation in December had been markedly reduced by the policy, though this effect appears to be decreasing over time. Continued monitoring and policy review is warranted in order to ensure that the initial effect of the intervention be maintained.

A cluster of melioidosis cases from an endemic region is clonal and is linked to the water supply using molecular typing of Burkholderia pseudomallei isolates

Nine cases of melioidosis with four deaths occurred over a 28-month period in members of a small remote Aboriginal community in the top end of the Northern Territory of Australia. Typing by pulsed-field gel electrophoresis showed isolates of Burkholderia pseudomallei from six of the cases to be clonal and also identical to an isolate from the community water supply, but not to soil isolates. The clonality of the isolates found in this cluster contrasts with the marked genetic diversity of human and environmental isolates found in this region which is hyperendemic for B. pseudomallei. It is possible that the clonal bacteria persisted and were propagated in biofilm in the water supply system. While the exact mode of transmission to humans and the reasons for cessation of the outbreak remain uncertain, contamination of the unchlorinated community water supply is a likely explanation.

The changing public-private infrastructure mix: Economy-wide implications

This article provides an economy-wide perspective on the changing role of the public sector in developing economic and social infrastructure in Australia. It analyses the scale and macroeconomic significance of the key economic and social infrastructure sectors - communication services, electricity, gas and water supply, transport, education, health and community services, government administration and defence. It then canvasses the major policy issues that have arisen in the progression from public to private infrastructure provision and considers why concerns about the trend fall in traditional public works spending may be misplaced in light of recent economic and institutional changes.

Optimal price regulation in a growth model with monopolistic suppliers of intermediate goods

In this paper we investigate the trade-off faced by regulators who must set a price for an intermediate good somewhere between the marginal cost and the monopoly price. We utilize a growth model with monopolistic suppliers of intermediate goods. Investment in innovation is required to produce a new intermediate good. Marginal cost pricing deters innovation, while monopoly pricing maximizes innovation and economic growth at the cost of some static inefficiency. We demonstrate the existence of a second-best price above the marginal cost but below the monopoly price, which maximizes consumer welfare. Simulation results suggest that substantial reductions in consumption, production, growth, and welfare occur where regulators focus on static efficiency issues by setting prices at or near marginal cost.