The Relationship between the Income Elasticities of Demand and Willingness to Pay

Flores, Nicholas E.; Carson, Richard T.

doi:10.1006/jeem.1997.0998

Cited by 160 publications

(84 citation statements)

References 15 publications

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“…If we assume that WTP is an adequate proxy for quantity demanded, then this finding suggests that water quality is either a normal or luxury good (see, e.g., [90]). The negative slope associated with SOUTH signifies that individuals in the southern region of the US have a lower average WTP (after accounting for other factors like income) to protect water quality compared to other regions ( Table 3).…”

Section: Systematic Variation In Income and Site Variablesmentioning

confidence: 99%

The Value of Forest Conservation for Water Quality Protection

Kreye

Adams

Escobedo

2014

Forests

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Abstract:Forests protect water quality by reducing soil erosion, sedimentation, and pollution; yet there is little information about the economic value of conserving forests for water quality protection in much of the United States. To assess this value, we conducted a meta-analysis of willingness-to-pay (WTP) for protecting unimpaired waters, and econometrically determined several significant drivers of WTP: type of conservation instrument (tool), aquatic resource type, geographic context, spatial scale, time, and household income. Using a benefit transfer to two highly forested sites, we illustrate the importance of these factors on WTP for water quality protection programs, forest conservation and policy design.

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Section: Systematic Variation In Income and Site Variablesmentioning

confidence: 99%

The Value of Forest Conservation for Water Quality Protection

Kreye

Adams

Escobedo

2014

Forests

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“…Hence ε W will be significantly greater than one in the short run and, arguably, smaller in the long run as price elasticities rise. Flores and Carson (1997) show that the size of ε W cannot be determined from the size of ε Y (as is clear from the equation above) and offer no empirical support for small or large values. Kristrom and Riera (1996) analyse contingent valuation studies of environmental change 12 and conclude that ε W is less than one, i.e.…”

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confidence: 93%

“…Essentially, public goods are exogenous to household and corporate decisions. Hence the relevant income elasticity is what has been called in the literature the 'price flexibility of income' (Randall and Stoll, 1980) or the 'income elasticity of virtual price' (Hanemann, 1991), the 'income elasticity of willingness to pay' (Flores and Carson, 1997), the 'income elasticity of environmental value' and the 'income elasticity of environmental improvement' (Kristrom and Riera, 1996). Appendix E sets out the basic relationships.…”

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confidence: 99%

Public and private spending for environmental protection: a cross‐country policy analysis

Pearce

Palmer

2001

Fiscal Studies

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OECD data are used to investigate public and private environmental expenditures and, although they are more complete and consistent than other datasets, they are still poor. This is important in the context of measuring the benefits of environmental protection, when little is really known about its actual costs. Despite these limitations, this study demonstrates that there has been no shift towards an increasing private sector burden relative to the public sector over time. The paper also finds little evidence to show that environmental expenditures negatively impact on economic growth, although there is inconsistency between the 'no effects' finding of the competitiveness literature and the 'negative effects' finding of most of the productivity literature. Finally, the elasticity of expenditure with respect to income is found to be 1.2, lower than would be expected if the 'environmental demand effect' is significant in explaining the downward slope of the environmental Kuznets curve.JEL classification: Q28.

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“…First, income elasticities presented in this paper actually are reduced-form coefficients that involve the marginal cost of pollution control as well as the income elasticity of demand for pollution control. Second, as demonstrated by Flores and Carson (1997), elasticities of willingness to pay with respect to income will generally be less than conventionally conceived income elasticities. Nevertheless, these relatively optimistic conclusions concerning the link between economic growth and environmental quality should, however, be treated cautiously in light of the numerous general limitations of environmental Kuznets curve analysis as well as the specific limitations of this study including:…”

Section: Implications and Conclusionmentioning

confidence: 96%

Income and environmental R&D: empirical evidence from OECD countries

Komen¹,

1997

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This paper extends previous empirical studies of the environmental Kuznets curve by examining the role of rising incomes in promoting development of new technologies directed toward environmental improvements. The main result, based on an analysis of data from 19 OECD countries for the period 1980-94, shows that the income elasticity of public research and development funding for environmental protection is positive, and may be close to unity. This finding suggests that emissions of at least some pollutants may decline with income after a threshold level of income is reached. However, this should be interpreted cautiously in light of: (1) the small size of public research and development funding relative to overall spending on environmental protection, (2) the ability of a country to substitute between public and private research and development expenditures, as well as among alternative policy instruments, and (3) the possibility that public research and development funding may be a form of industrial subsidy in some countries.

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The Relationship between the Income Elasticities of Demand and Willingness to Pay

Cited by 160 publications

References 15 publications

The Value of Forest Conservation for Water Quality Protection

The Value of Forest Conservation for Water Quality Protection

Public and private spending for environmental protection: a cross‐country policy analysis

Income and environmental R&D: empirical evidence from OECD countries

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