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Valuing the Environment in Developing Countries

Case Studies

Edited by David Pearce, Corin Pearce and Charles Palmer

In this book, the first of two volumes, the authors provide detailed case studies of valuation techniques that have been used in developing countries. They demonstrate that valuation works and that it can yield significant insights into policy-relevant issues regarding conservation and economic development. The authors address a whole range of environmental issues under the broad themes of water and air quality, biological diversity and forest functions. The economic approaches covered include contingent valuation, hedonic property prices, travel cost methodologies and benefits transfer.
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Chapter 6: Willingness to pay for improved water quality in Kathmandu

Case Studies

Dirgha N. Tiwari


Dirgha N. Tiwari 1 INTRODUCTION The increasing threat posed to human health due to inadequate water supply and increased water pollution in urban centres of South Asian countries has become a matter of growing concern in recent years. Inadequate provision and poor quality of water, on the other hand, impose additional costs to society. Increases in household expenditures due to increased expenditures in treatment of poor water quality and private medical expenses are among such costs. Furthermore, deteriorating environmental quality also demands additional public investments which could impose additional financial burdens on the national government and local municipalities. Past studies have indicated that the prevalence of low-equilibrium traps in the water supply systems (WSS) in developing countries is mainly associated with pricing policy and institutional failures (World Bank, 1993a, Tiwari, 1998). The design and implementation of pricing policy reforms play a vital role in improving the financial sustainability of water supply systems and in averting human health risks. Efforts towards necessary pricing policy and institutional reforms in developing countries, on the other hand, are also constrained by the lack of necessary information. The contingent valuation (CV) studies have widely been carried out in developing countries in recent years to help decision makers to reform water pricing policies. This method is developed to elicit directly statements of economic value of unpriced natural resources for changes in their quality and quantity and have long been used by the environmental economists to estimate economic benefits for a variety of policies (Mitchell...

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