Atmospheric Visibility Valuationmethod Andempirical Study

In environmental economics, environmental resources including environmentalquality are categorized as amenity resources.Due to its importance to humanwelfare,the amenity resources theoretical study and valuation is an ongoing issue atthe academic frontier in the environmental economics area.Environmental resources provide materials and energy for the production of good andservices that support the life of human beings, and to maintainthe flow of eco-systemservices. Besides to all these benefits, to enjoy a favorable environmental quality asone of the amenity resources.is an important component of people’s quality of life,and generally speaking, this importance will be more prominent as people’s incomeincreases. Atmospheric visibility, one of the representative amenity resources,provides for humans not only the obvious and well-recognized physicalutilities suchas safer transportation due to good visibility conditions, but also with amenity servicesrelated with aesthetics and psychology which are also important to consider. However,most of the studies on visibility,including studies on the importance and thecost-benefit of deterioration or improvement of visibility, are limited to researchaboutbenefits that are obvious and physical,until now onlyfew of them are focus onsystematically study and value the amenity service of atmospheric visibility. Recently in China, people’s economic situation has been improved significantly,particularly in big cities;hence their demand for environmental quality is increasinggradually. But at the same time, the atmospheric visibility in most cities of China hasbeen continually and widely deterioratedthrough these years, resulting in both,anincreasingly acute contradiction for the supply and demand of amenity servicesfrom the favorable environment and an increasing scarcity of the favorable visibility.These years the atmospheric visibility problem draw the attention of differentstakeholders at different levels on the society especially because of its frequency ofoccurrence and increasing severity, as an example the world reported China’snational-wide haze incident during January2013.With the fast and dramatic development of the economy, society and environment inChina, which is ongoing and continuing, people are developing and improving theirknowledge, understanding and requirementson high life quality, as it can be noticedthat the value of the amenity resources is an increasing concern. This exploratorystudy on the demand and preferences of the amenity resources instead of otherordinary physical resources puts forward new ideas and requests of environmentalquality managementnow and in the future, which is also an important research fieldand frontier of environmental economics.Based on the knowledge of the traits and importance of the amenity resources, theunderstanding on the relationship between atmospheric visibility and human welfareinthe current stage of China’s economic development, and the related research progress,this thesis focuses on answering the following academic questions. To wit, whetherthe traits and importance of the amenity resources such as visibility can be analyzeand understood by publics as one of the important components of their quality of lifein the social-economic context of the up-to-date China? And which are the conditionalfactors or determinants of the importance of the visibility and the visibility valuation.To answer the key questions, an innovative and exploratory work has been performedin this thesis as follows. First of all, I identifed and analyzed the awareness of theimportance of visibility for the publics and the reasons for that; In addition, I testedwhether people are willing to pay or willing to accept a compensation for changes invisibility in conditional scenarios, that is, I identified the conditional factors of public valuation of visibility and the trade-offs using valuation methods and scenario designs;Finally, I analyzed and discussed the determinants of public valuation andpreferencesfor the atmospheric visibility by using surveysto finally analyze theobtained data.In respect to the analysis of the academic issues, I focusedthe thesis on the followingbasic theory and methodology. First, using the environmental economic theory Ielaborated and analyzed the socio-economic value of the visibility as a typicalamenity resource; Second, Iidentified and discussed the dominant factors for valuingvisibility and the related mechanisms; Third, I usedempirical methods toquantitatively estimate the value of visibility, and identifiedits main determinants andcorresponding effects; Last, I also contributed with some improvement on the specificmethodology for the valuation of visibility, and further study on other academic issuessuch as the similarities and differences between willingness to pay for visibilityimprovement and deterioration, or between willingness to pay and willingness toaccept for changes in visibility.The purpose of this thesis study is to explore and study,in the China’s current context,the public awareness and preferencesabout atmospheric visibility as one of the typicalamenity resources. Aiming to include the key issues in the topic and reduce the impactof the research difficulties in environmental valuation and based on the latestadvances on the theory and research of environmental economics, I tried to apply theappropriate method to evaluate the atmospheric visibility in China and analyzed thedeterminants of visibility valuation and the related mechanismsusing a theoretical andempirical study. The results and implications of this thesis are beneficial providing abenchmark for policy analysis or decision making.The main results are the following,(1) At present, the majority of Beijing residents are affected to some extent by lowvisibility, these perceptions includereduced high quality scenery sight, moodchanges and unsafe feelings during the use of transportation.(2) About70percent of the sample can perceived and understood the importance ofvisibility as an amenity resource and showed a positive WTP/WTA for changes in visibility. The mean WTP ranges from363RMB to576per capita year-1(themedian WTP ranges from100RMB to200RMB per capita year-1), and the meanWTA is about2942RBM per capita year-1(the median WTA is1000RMB percapitayear-1). The WTP for improvements in visibility is relatively less than theone for preventing reductions on visibility, while both WTP are significantly lessthan the WTA for reductions on visibility.(3) People’s valuation on visibility mainly depends on their perception and judgmentof visibility, environmental awareness, habits and customs, and socio-economiccharacteristics. In the model the study used to find the significant drivers tovaluate visibility, the following variable’s coefficients tested significant andpositive: relative high income, gender (male), experience a higher annual visibilityduring their stay in Beijing, impression by good or poor visibility, searching for airquality initiative and environment-friendly life style and behaviors, while thecoefficient of age is significant and negative.(4) Atmospheric visibility represents one of the typical amenity resources and showsdifferent demand characteristics thanthe ordinary environemental goods. InChina’s present economic development context, public value on visibility showedsimilar characteristics as “luxury goods”, the value is not simply increasing asindividual income increases, but also the significance of the income variable wasobserved in respondents with high income level while low income levelsrespondents showed a notsignificant explanatory value.The policy implications and practical significance of this study are summarize asfollows,(1) Basing on the significant effects and the value of the visibility to the public, weshould give sufficient consideration to the effects of visibility on human welfareand estimate quantitatively the benefits of improving the visibility through thecontrol and management of the environmental quality, this estimations can helppolicy makers especially in the cost benefit analysis of the air quality relatedpolicies;(2) Meanwhile, we should take full account of various public perceptions, judgmentsand understandings of the visibility, and also different preferences anddemand of visibility for different sectors of the society, which may promotetargeted and effective policy making and implementation.(3) As the scarcity of the amenity resources in China is becoming increasinglyimportant and public preferences and demand for visibility is dramatically risingwith the increase of income, the importance of the visibility will be even moresignificant in the future. So the decision makers should prepare a coping strategyas soon as possible, to keep the balance of the demand and supply of the amenityresources such as visibility, and to improve comprehensively the quality of life ofthe citizens.