Hedonic valuation of harmful algal bloom pollution: Why econometrics matters?. (August 2021)

• Record Type: Journal Article
• Authors: Osseni, Abdel Fawaz; Bareille, Francois; Dupraz, Pierre
• Is Part Of: Land use policy. Volume 107(2021)
• Publication Date: 2021-08
• Subjects: Agricultural externalities -- Agroenvironmental policy -- Green algae -- Nonmarket valuation -- Capitalization -- Cost-benefit analysis; Land use -- Periodicals; Land use -- Government policy -- Periodicals; Sol, Utilisation du -- Périodiques; Sol, Utilisation du -- Politique gouvernementale -- Périodiques; Electronic journals; 333.7305
• DOI: 10.1016/j.landusepol.2019.104283
• Languages: English
• ISSNs: 0264-8377

Abstract

Highlights: We value Harmful Algal Bloom (HAB) pollution using hedonic pricing method. We account for three sources of endogeneity. We estimate a willingness to pay of 208€/household/year to clean beaches from HAB pollution. The adjacency effect due to housing market functioning explain one-third of this WTP. Abstract: Harmful algal bloom (HAB) pollution is a major environmental threat worldwide. This is the case in Brittany, where approximately half of the coastal municipalities has been polluted in the two last decades. This pollution affects the welfare of the population by decreasing the accessibility of beaches for several professional and recreational users (anglers, walkers, joggers, etc.). Here, we estimated the willingness to pay (WTP) to reduce HAB pollution levels using the hedonic pricing method for the particular case of the Breton rural housing market between 2010 and 2012. We found that, on average, residents that were located 20 km from a polluted beach were willing to pay approximately 208€/inhabitant/year to reduce HABs to the minimal observed levels on Breton seacoasts. This estimate controlled for three sources of identified potential biases biathat may affect the quality of the estimation: the agricultural characteristics of upstream watersheds, the spatial unobserved heterogeneity and the adjacency effects. Indeed, the estimated WTP was 18% to 46% higher than the WTP that was estimated with a nonspatialized econometric model that did not account for these features. In particular, the adjacency effect on house prices due to housing market functioning explained one-third of the total effect. This study illustrates the importance of using suitable econometric specifications when applying revealed preference estimations to house prices.