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Working Paper: A Stated Preference Study of the Chesapeake Bay and Watershed Lakes

Paper Number: 2015-06

Document Date: 11/2015

Author(s): Chris Moore, Dennis Guignet, Kelly B. Maguire, Chris Dockins, and Nathalie B. Simon

Subject Area(s): Water Pollution; Economic Damages/Benefits; Existence/Nonuse Values; Benefit-Cost Analysis; Valuation

Keywords: Chesapeake Bay; choice experiment; stated preference; TMDL; water quality

Abstract:  The Chesapeake Bay is the largest estuary in the United States and the third largest in the world. The surrounding Watershed encompasses 64,000 square miles, and is home to about 18 million people. There have been numerous studies measuring the value of different components of the Chesapeake Bay but no study or set of studies provides a comprehensive estimate of the values associated with the improvements likely to result from recently implemented pollution limits. To fill this gap we developed a stated preference (SP) survey that uses a discrete choice experiment response format to examine households’ willingness to pay (WTP) for water quality improvements in the Chesapeake Bay. During extensive focus group testing, care was taken to identify the environmental attributes that are most important to both users and non-users and to quantitatively describe these attributes using understandable and tangible metrics. The survey was mailed to a stratified random sample of households across 17 states in the eastern U.S. and the District of Columbia. This paper reports the results of the empirical analysis, including marginal WTP estimates for each environmental attribute and total WTP for the expected outcome of the pollution reduction program. A comparison of WTP across households suggests that a substantial portion of the benefits can be attributed to nonusers. Results also show that benefits from improving water quality in freshwater lakes in the Watershed are an important ancillary benefit likely to result from reducing pollution in the Bay./p>

This paper is part of the Environmental Economics Working Paper Series.

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