Essays on Valuation of Environmental Attributes

University dissertation from Uppsala : Department of Economics, Uppsala University

Abstract: This thesis consists of three self-contained essays. Essay 1. Radon is a radioactive gas which may occur in buildings and originates mainly from radioactive bedrock and radioactive building materials. In this paper we examine the willingness-to-pay for mitigation of residential radon. A rich data set, from the municipality of Stockholm (Sweden) for the period 1994 - 1996, enables estimation of models accounting for spatial correlation. Our estimate of the marginal willingness-to-pay is approximately SEK 58 200. Our results show that failure to account for the spatial structure inherent in the data, tend to over-estimate the marginal willingness-to-pay for mitigation of residential radon. Essay 2. This study examines the impact of a refinery on property values. The objective was to study the impact of the non-aesthetic view, the odor, and the impact of the reduced quality of coastal amenities in the surrounding area. To carry out the analysis, a spatial hedonic house price model was applied to transaction data enriched with a measure of visibility of the refinery determined by site inspection. The results indicate that all property values increase with distance to the refinery, but at more than twice the rate in the upwind direction, suggesting a negative effect of odor on property prices. In the proximity of the refinery, a view of the refinery tends to have a negative effect on property values, for example at 1 000 m the estimated effect is -24.5 %. At larger distances, as other positive objects in the view become dominant, the effect turns positive. At 2 000 m the effect is 0.8 %. To study the impact of the reduced quality of coastal amenities, we examined the premiums paid for properties with a sea front and sea view. The results show large differences in premiums and the estimated premium for a sea front (view) in a non-adjacent parish is 139.4 % (69.0 %) and in an adjacent parish 47.7 % (23.7 %), suggesting that a lower quality of coastal amenities could have a strong negative effect on property values. Essay 3. In this paper we conduct a choice experiment to assess aesthetic improvements in the neighborhood of a refinery located on the Swedish west coast. Considered improvements are: a reduction of vessels operating the refinery jetty, elimination of the odor of crude oil, and removal of the chimneys. We find that respondents marginal willingness-to-pay for an elimination of the odor of crude oil amounts to SEK 3 075. The marginal willingness-to-pay for removal of the chimneys is estimated to SEK 2 082. We find no support for preferences in favour of a reduction of vessels operating the refinery jetty. We also examine if the preferences for the aesthetic improvements differ between permanent residents and second-home owners. The results suggest that both groups have the same preferences regarding the proposed improvements in the environment surrounding the refinery.

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