FEEM working papers "Note di lavoro" series
2006 .113

Paying for Permanence: Public Preferences for Contaminated Site Cleanup


Authors: Anna Alberini, Stefania Tonin, Margherita Turvani, Aline Chiabai
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: Journal
Keywords: Value of a Statistical Life,Latent Risk Reductions,Individual Discount Rates,Conjoint Choice Questions,Contaminated Sites,Remediation
JEL n.: J17,I18,K32,Q51,Q53
JEL: Journal of Risk and Uncertainty
Pages: Vol. 34, No. 2, pp. 155-178
Date: 04/2007

Abstract

We use conjoint choice questions to investigate people’s preferences for income and reductions in mortality risks delivered by contaminated site remediation policies. Our survey is self-administered using the computer by residents of four cities in Italy with severely contaminated sites. We estimate the Value of a Statistical Life to be about €5.6 million for an immediate risk reduction. If the risk reduction takes place 20 years from now, however, the implied VSL is about €1.26 million. The discount rate implicit in the responses to the conjoint choice questions is about 7%. People are willing to pay for permanent risk reductions, but not just any amount. Risk reductions in the nearer future are valued more highly than risk reductions in the more distant future. We also find that the VSL is “individuated,” in the sense that it depends on observable individual characteristics of the respondents, familiarity with contaminated sites, concern about the health effects of exposure to toxicants, having a family member with cancer, perceived usefulness of possible government actions, and the respondent’s beliefs about the goals of government remediation programs. Additional questions suggest that respondents discount lives, and do so at a discount rate in the ballpark of that implicit in their risk v. money tradeoffs.

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