How Much to Abate Pollution?

American Association for Public Opinion Research How Much to Abate Pollution? Author(s): Clyde Eastman, Alan Randall and Peggy L. Hoffer Source: The Public Opinion Quarterly, Vol. 38, No. 4 (Winter, 1974-1975), pp. 574-584 Published by: Oxford University Press on behalf of the American Association for Public Opinion Research Stable URL: http://www.jstor.org/stable/2748129 Accessed: 04-11-2016 14:33 UTC REFERENCES Linked references are available on JSTOR for this article: http://www.jstor.org/stable/2748129?seq=1&cid=pdf-reference#references_tab_contents You may need to log in to JSTOR to access the linked references. JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://about.jstor.org/terms American Association for Public Opinion Research, Oxford University Press are collaborating with JSTOR to digitize, preserve and extend access to The Public Opinion Quarterly This content downloaded from 184.57.22.81 on Fri, 04 Nov 2016 14:33:53 UTC All use subject to http://about.jstor.org/terms  CURRENT RESEARCH This section of the Quarterly is reserved for brief reports of resear discussions of unsolved problems, methodological studies, and public opinion data not extensively analyzed or interpreted. Succinct case histories are welcom- ed, as well as hypotheses and insights that may be useful to other students of public opinion. Usually, material in this section will be shorter, more informal, and more tentative than in preceding pages of the Quarterly. HOW MUCH TO ABATE POLLUTION?* BY CLYDE EASTMAN, ALAN RANDALL, AND PEGGY L. HOFFERt The pollution associated with the generation of electric power in the Four Corners Region of New Mexico and Arizona has received much attention in recent years. Two plants are already in operation and five more are under construction or planned. The plants and associated min- ing activities have economic benefits: they generate jobs and local business in the region and supply large metropolitan areas such as Los Angeles and Phoenix with electricity. But there are also costs, largely within the region, in the environmental damage that results from this ac- tivity: smoke and dirt from the generating plants, dust and barren mounds from the strip-mined areas, and massive lines transmitting power to the consuming regions. The lines and smoke are unsightly; the smoke and dirt may cause damage to plants, animals, and humans. Technology already exists, or could be adapted, to clean up most of the pollution now being created; however, employing that technology costs money. Since it is assumed that people will not willingly go without elec- tricity, it becomes a matter of how much money they will pay for how much pollution abatement. As part of a comprehensive study of the situation, we attempted to measure the concern of affected citizens over the aesthetic environmental damage produced by the coal-electricity complex in terms of an economic demand of the concerned citizens for the abatement of these damages. The measure we used, by no means the only one possible or relevant, was willingness of the environment users to pay for abatement.' * Journal article 499. Agricultural Experiment Station, New Mexico State University, Las Cruces, New Mexico 88003. t Clyde Eastman is Associate Professor and Peggy L. Hoffer is a former Visiting structor in Sociology at New Mexico State University. Alan Randall is Assistant Professor of Agricultural Economics at the University of Kentucky. This study was funded by the New Mexico Agricultural Experiment Station. I Alan Randall, "Market Solutions to Externality Problems: Theory and Practice," American Journal of Agricultural Economics, Vol. 54, 1972, pp. 175-183. This content downloaded from 184.57.22.81 on Fri, 04 Nov 2016 14:33:53 UTC All use subject to http://about.jstor.org/terms  HOW MUCH TO ABATE POLLUTION? 575 It has been well established by other researchers that many people are willing to pay some amount of money for a cleaner environment.2 Our comprehensive study required demand data, necessitating as precise as possible an estimate of willingness to pay. So we decided to collect data by personally interviewing a sample of the affected population, using a questionnaire that included bidding games designed for that purpose. If the expression of willingness to pay is to be a reliable predictor of behavior, the measurement items should be framed concretely and in terms of established, routinized behavior. They should quickly and clear- ly develop both the object (pollution) and the situation (electric power generation) in the minds of the respondent.3 This caused several difficulties. People are not accustomed to paying for environmental im- provements. However, since they are used to paying for many useful ser- vices and utilities, it was not impossible to find an appropriate vehicle for payment. In the Four Corners Region, the affected population can be divided into three broad groups: (1) residents of Indian reservations, primarily Navajos, but also members of several other tribes; (2) residents of the non-reservation sections of the region, primarily Anglo-Americans, but also a few Spanish-Americans, Native Americans living off the reser- vations, and other minorities; and (3) tourists and recreationists who visit the area to enjoy its unique natural, historical, and cultural attractions. Since we found no one payment vehicle satisfactory for use among all groups, and since it seemed desirable, where possible, to compare the results obtained using more than one vehicle, we conducted a number of bidding games. This article discusses the various bidding-game techniques used to es- timate willingness to pay for pollution abatement and outlines the results obtained. We close with some suggestions that may assist those who would follow us in a similar endeavor to benefit from our experience. THE BIDDING GAMES The bidding games were part of three prepared questionnaires (one for each sub-population) administered to stratified random samples of 71 residents of Indian reservations, 526 non-reservation residents, and 150 tourists and recreationists. Interviewers were carefully trained, both for- mally and by experience in two separate questionnaire pre-testing situations. They painstakingly explained the rules of the game to the respondents, each of whom was an adult representing his household. As 2 For example, "The Polls: Pollution and Its Costs," Public Opinion Quarterly, Vol. 36, 1972, pp. 120-135. 3 Milton Rokeach, Beliefs, Attitudes and Values, San Francisco, Jossey-Bass, 1969, pp. 126-129. This content downloaded from 184.57.22.81 on Fri, 04 Nov 2016 14:33:53 UTC All use subject to http://about.jstor.org/terms 576 EASTMAN, RANDALL, AND HOFFER preparation for the bidding games, interviewers asked each respondent a series of questions about environmental matters. Then the subject of the coal-electricity complex in the Four Corners area was explicitly raised. The respondent was shown three sets of photographs depicting three levels of environmental damage around the plant. Set A depicted the highest level of environmental damage, accurately representing the actual situation in the early years of plant operation. One photograph showed the plant circa 1969, prior to installation of some additional emissions-control equipment, producing its historical maximum emissions of air pollutants. Another depicted the spoil banks as they appear following strip mining but prior to levelling. A third show- ed electricity transmission lines crossing the landscape. Set B showed an intermediate level of damage. One photograph show- ed the plant circa 1972, after additional controls had reduced particulate emissions (i.e., the type of emissions most destructive of visibility). Another showed the spoil banks levelled but not re-vegetated. A third showed the transmission lines placed less obtrusively (i.e., at some dis- tance from major roads, etc.). Set C was intended to depict a situation in which the industries con- tinued to operate, but with minimal environmental damage. One photo- graph showed the plant with visible emissions reduced to zero, accom- plished by photographing the plant on a day when it was shut down. A second showed a section of the arid land in its natural state, intended to depict a situation in which the transmission lines were placed under- ground and the strip-mined land completely reclaimed. The interviewers verbally described the salient features of each set of photographs to each respondent. Most of the respondents (with the ex- ception of some recreationists), were familiar with the operation of the plant and mine over the last eight years and recognized situation A as ex- actly how it was only a few years earlier. Situation B was a good ap- proximation of the real situation at the time of the interviews. With the help of photographs, situation C (the unspoiled landscape) could be readily visualized. For each bidding game played, respondents were asked to consider situation A, the highest level of environmental damage, as the starting point. The bidding games were designed to elicit the highest amount of money that the respondent was willing to pay in order to improve the en- vironment to situations B and C. "Yes" or "No" answers were elicited to questions expressed in the form "Would you pay amount X . . . ?" A "yes" answer lead the interviewer to raise the amount and repeat the question, maybe several times, until a "no" answer was obtained. A "no" answer lead the interviewer to reduce the amount until a "yes" answer was obtained. The amount eliciting the highest "yes" answer was record- ed as the amount the respondent was willing to pay. This content downloaded from 184.57.22.81 on Fri, 04 Nov 2016 14:33:53 UTC All use subject to http://about.jstor.org/terms  HOW MUCH TO ABATE POLLUTION? 577 The respondents were told to assume that the vehicle for payment used in a particular game was the only possible way in which environmental improvements could be obtained. This stipulation was designed to minimize the incidence of zero bids as protests against either the possibility that "willingness-to-pay" games implied citizens ought to bear the costs of environmental improvements or the particular method of payment used in a particular game. If a respondent indicated no willingness to pay at all, he was asked a series of questions to find out why. A respondent indicating that he did not consider his household harmed in any way by the environmental damage and therefore saw no reason to pay for environmental im- provements was recorded as bidding zero. If a respondent indicated that his zero bid was a protest against the game, his answer was recorded as a non-response, since he had refused to play the game by the stated rules. The bidding games are described below and their results presented. Electricity-Bill Game The monthly electricity bill seemed a suitable vehicle for measuring willingness to pay. The production of electricity causes environmental damage, and many people readily comprehend that reducing the damage may raise the cost of operating the industry, and that passing these ad- ditional costs on to consumers is a not unlikely outcome. Residents of non-reservation sections of the region routinely pay a monthly electricity bill, so a bidding game based upon the monthly electricity bill was played with the non-reservation resident sample. This game was unsuitable for use with the other two samples. Many residents of Indian reservations do not have electricity available in their homes. Recreationists do not pay monthly electricity bills while vacation- ing away from home. TABLE 1 NON-RESERVATION RESIDENTS' WILLINGNESS TO PAY FOR POLLUTION ABATEMENT BY AN INCREASE IN MONTHLY ELECTRIC BILLSa Dollar Increase Per Month Number of Percentage of in Electric Bills Respondents Sampleb No Response 111 21% Willing to pay nothing extra 31 6 $.01-$1.00 102 19 $1.01-$2.00 191 36 $2.01-$3.00 47 9 2$3.01 44 8 aMean = $1.91/month (for those responding); standard deviation = 1.46. b Due to rounding-off error, this does not total 100 per cent. This content downloaded from 184.57.22.81 on Fri, 04 Nov 2016 14:33:53 UTC All use subject to http://about.jstor.org/terms 578 EASTMAN, RANDALL, AND HOFFER TABLE 2 NON-RESERVATION RESIDENTS' WILLINGNESS TO PAY FOR POLLUTION ABATEMENT BY AN INCREASE IN SALES TAXESa Cent Increase Per Dollar Number of Percentage of in Sales Taxes Respondents Sample No Response 167 32% Willing to pay nothing extra 26 5 .01-1.00 151 29 1.01?-2.00? 121 23 2.01 ?-3.00? 33 6 23.01? 28 5 a Mean = 1.4 The respo household electricity bill. He was then asked to imagine that an ad- ditional charge was added to his electricity bill and the electricity bills of everyone who uses electricity produced in the Four Corners area, even people as far away as Southern California. All of the additional money collected would be used to repair the environmental damage caused as a result of electricity production in the Four Corners Region. The results obtained using the electricity-bill game with the non- reservation resident sample are shown in Table 1. Only the responses for moving from situation A to situation C are shown. With all games, the bidding patterns for situation B were similar to those obtained for situa- tion C, except that the amounts bid were about 40 per cent smaller, as ex- pected. The Sales-Tax Game Respondents in all three subpopulations are familiar with the practice of paying sales taxes. Most do so frequently and understand that sales- tax revenues are used to provide useful public services. Respondents can readily conceive of a public agency collecting a sales tax from residents of the affected region and using the income to finance environmental im- provements. The sales-tax bidding game was used for both resident samples. It was not used with the recreationist sample, since those in that group bring most of their own equipment and supplies and usually purchase only a few items in the region, making a regional sales tax largely irrelevant for them. Respondents were asked to suppose a regional sales tax was collected from citizens of the Four Corners area for the purpose of financing en- vironmental improvements. Every cent of the additional tax would be used for environmental improvements and all citizens would pay the tax. This content downloaded from 184.57.22.81 on Fri, 04 Nov 2016 14:33:53 UTC All use subject to http://about.jstor.org/terms  HOW MUCH TO ABATE POLLUTION? 579 TABLE 3 RESERVATION RESIDENTS' WILLINGNESS TO PAY FOR POLLUTION ABATEMENT BY AN INCREASE IN SALES TAXESa Cent Increase Per Dollar Number of Percentage of in Sales Taxes Respondents Sample No Response 26 37% Willing to pay nothing extra 1 1 .01?-1.00? 37 52 >1.01? 7 10 a Mean = .77? extra on each dollar (for those responding); standard deviation = .80. The results of the sales-tax game for moving from situation A to situa- tion C are presented in Table 2 for the non-reservation residents and in Table 3 for the reservation residents. The non-reservation residents' non- response rate was higher here (32 per cent) than in the electricity- bill game (21 per cent), indicating that more respondents were motivated to protest against the sales tax as a vehicle for financing environmental im- provements. Predictably, reservation residents were willing to pay less additional sales tax since their mean disposable income was much lower than that of the non-reservation residents. The Monthly-Payment Game The reservation resident sample was also asked to play a game based on a single monthly payment for environmental improvements, with no particular payment vehicle indicated. The results (Table 4) show that about half did not respond to this game. The Users-Fee Game Measuring recreationists' willingness to pay for environmental im- provements required a game that focused on the activities associated with vacationing and included the collection of payments while the TABLE 4 RESERVATION RESIDENTS' WILLINGNESS TO PAY FOR POLLUTION ABATEMENT BY SOME AMOUNT EACH MONTH WITH NO VEHICLE SPECIFIEDa Amount in Dollars Willing to Number of Percentage of Pay Each Month Respondents Sample No Response 35 49% Willing to pay nothing extra 2 3 $.01-$1.00 14 20 $1.01-$2.00 5 7 $2.01-$3.00 5 7 >$3.01 10 14 a Mean = $1.52 per month (for those responding); standard deviation = 2.52. This content downloaded from 184.57.22.81 on Fri, 04 Nov 2016 14:33:53 UTC All use subject to http://about.jstor.org/terms 580 EASTMAN, RANDALL, AND HOFFER TABLE 5 RECREATIONISTS WILLINGNESS TO PAY FOR POLLUTION ABATEMENT BY AN INCREASE IN USER FEESa Dollar Increase In Number of Percentage of Daily User Fees Respondents Sampleb No Response 20 13% No willingness to pay extra 8 5 $.01-$1.00 42 28 $1.01-$2.00 37 25 $2.01-$3.00 26 17 2$3.01 17 1 1 a Mean = $1.84 per day (for those responding); standard deviation = 1.62. b Due to rounding-off error, this does not total 100 per cent. respondents were in the region and using the environment. The payment of user fees for recreation services (campsite, utilities hook-up, boat launching, etc.) seemed such a vehicle. If visitors are concerned about en- vironmental quality in the places where they vacation, the payment of an additional sum along with their usual daily user fees provides a suitable way to express that concern. A sample of recreationists in the region's national parks, monuments, forests, and state parks played a bidding game based on user fees. They were first asked the total sum of user fees they paid daily. They were then asked to suppose user fees in all the recreation areas in the Four Corners area were increased. All the additional money collected would be spent on environmental improvements. All recreationists would pay, and year- round residents would also pay through additional regional sales taxes. The results, shown in Table 5, indicate only 13 per cent protested against the game while 5 per cent bid zero and 81 per cent were willing to pay some amount. Those accepting the game were willing to pay an average of $1.84 additional fees per day. Compensation Games All bidding games reported to this point assume that the citizens of the region or the consumers of electricity produced there must pay the costs of abating damages caused by the coal-power complex. Such games might have met with resistance from respondents who felt strongly that the "4victims" of environmental damage ought not be expected to pay the costs of abatement. Further, there are good theoretical reasons to expect that "demand" for abatement is lower when the affected parties must pay than when the acting parties (the producers of damage) must pay the costs of abatement.4 4Randall, op. cit. This content downloaded from 184.57.22.81 on Fri, 04 Nov 2016 14:33:53 UTC All use subject to http://about.jstor.org/terms  HOW MUCH TO ABATE POLLUTION? 581 TABLE 6 AMOUNT OF COMPENSATION PER MONTH ACCEPTABLE TO NON-RESERVATION RESIDENTS Dollars Compensation Number of Percentage of Paid Per Month Respondents Samplea No Response 61 12% Willing to accept no compensation 52 10 $1-$10 47 9 $11-$50 46 9 $51-$100 1 1 2 Some specific amount greater than $101 36 7 Infinity 273 52 a Due to rounding-off error, this does not total 100 per cent. Additional bidding games were developed on the concept that the creators of the damage-the industries-must either abate that damage at their own expense or pay compensation to the affected parties. We feared that the concept of compensation for damage might be difficult for many respondents to comprehend in a bidding-game situation, so we designed a game based on the concept of ownership and rental.5 "If you owned the environment and therefore had the right to insist on its preser- vation, for how many dollars per month would you be willing to rent it to the coal-electricity industry, if they damaged it as much as A?" . . . as B?" The research team understood that games such as this might predictably be less successful than the other games used because the situation is not rooted in the habits or experiences of the respondents. Nevertheless, it was felt that it would be worthwhile to attempt to use this game. It was used only with the non-reservation residents and the recreationists. The results for situation A (the worst damage) for the non-reservation sample are shown in Table 6, and for the recreationist sample in Table 7. TABLE 7 AMOUNT OF COMPENSATION PER DAY ACCEPTABLE TO RECREATIONISTS Dollars Compensation Number of Percentage of Paid Per Day Respondents Samplea No response 9 6% $0 16 11 $1-$10 20 13 $11-$50 7 5 $51-$100 0 0 Some specific number greater than $101 6 5 Infinity 92 61 a Due to rounding-off error, this does not total 100 per cent. I In retrospect, we concede that a direct-compensation game may have worked more effectively. This content downloaded from 184.57.22.81 on Fri, 04 Nov 2016 14:33:53 UTC All use subject to http://about.jstor.org/terms 582 EASTMAN, RANDALL, AND HOFFER It is notable that the percentage of non-response is lower in the compen- sation game than in the willingness-to-pay games. More than half of the respondents indicated that, if they had the right to insist on environmen- tal preservation, no amount of compensation would induce them to accept the degradation of the environment.6 For those who responded with a specific number greater than zero, but less than infinity, the amount of compensation acceptable was almost always greater than the amount of dollars they were willing to pay. RESPONSIBILITY FOR ENVIRONMENTAL IMPROVEMENT After the bidding games, each respondent was asked who should bear the financial cost of environmental improvement. Four options were con- sidered: (1) the people directly affected by it-i.e., the local residents and vacation visitors, (2) the final user of electric power, (3) the companies that operate the mine and power plant, or (4) some combination of the above. The results, summarized in Table 8, show that very few respondents thought that local residents and recreationists alone should bear the costs of alleviating environmental damage. The vast majority thought that they ought to be borne by the companies that operate the coal-power complex, the final users of electricity, or both of these groups in some combination. CONCLUSIONS Each of the bidding games was successful in some degree: each revealed a significant demand for environmental improvements in the region. TABLE 8 RESPONSIBILITY FOR ENVIRONMENTAL IMPROVEMENT, BY SUB-POPULATIONS Residents Indians Recreationists Who should pay the costs? Per Cent (N) Per Cent (N) Per Centa (N) Local residents and rec- reationists 2% (12) 4% (3) 3% (4) Final user of electric power 9 (47) 42 (30) 11 (17) The mining and electric companies 36 (189) 54 (38) 27 (41) Some combination of above 50 (264) 0 55 (83) Other 3 (14) 0 3 (5) a Due to rounding-of 6 One suspects that if less than infinity acceptable. Nevertheless, the findings indicate an impressive degree ot en- vironmental concern. This content downloaded from 184.57.22.81 on Fri, 04 Nov 2016 14:33:53 UTC All use subject to http://about.jstor.org/terms  HOW MUCH TO ABATE POLLUTION? 583 When bids were aggregated over the relevant populations, willingness to pay for environmental improvements amounted to sums in the tens of millions of dollars. One measure of the effectiveness of the games was the willingness of the sample members to respond. Non-response rates using the compensa- tion game were 6 per cent for recreationists and 12 per cent for non- reservation residents; using the electricity-bill game, they were 13 per cent for non-reservation residents; using the sales tax games they were 32 per cent for non-reservation residents and 37 per cent for reservation residents; and using the monthly payment game, they were 49 per cent for reservation residents. It must be concluded that the questions of who should bear the cost significantly affect response rates to bidding games of the type used. And, this was true even when games were worded, as ours were, to minimize this effect. Respondents were told to treat each game as though it referred to the only possible way environmental im- provements could be financed. While the compensation games had high response rates, many responses were obtained to the effect that no amount of compensation would be sufficient to induce the respondent to accept a polluted environ- ment. While such responses may be useful in identifying environmental concern, they are not helpful in calculating the aggregate demand for en- vironmental improvements. We cannot recommend conservation games for the purpose of estimating this demand. One opportunity existed for comparing the results of two different games played with the same sample: the electricity-bill and sales-tax games with the non-reservation residents. The mean bids were $23 for the electricity-bill game and $85 for the sales-tax game. These two estimates are surely within the same order of magnitude, yet the mean bid was noticeably higher for the sales-tax game. The sales-tax game also yielded a higher rate of non-response (due to ethical objections to the vehicle of payment). We have no evidence to satisfactorily explain this disparity. We can suggest two possible sources of difference: (1) The sales-tax game was clearly the more complex: it required bids based on a percentage of household expenditures on sales-taxable items while the electricity bill game was expressed in dollars per month. (2) The rules of the games required collection of payments from two different groups: the residents of the region in the sales-tax game and all users in the electricity-bill game. The latter group is many, many times larger than the former. Respondents may have correctly perceived that, to collect the same total amount of money, the electricity-bill game would require much smaller bids per household. When the bids were aggregated over the relevant populations, the total income from the electricity-bill game did, in fact, exceed that from the sales-tax game. This content downloaded from 184.57.22.81 on Fri, 04 Nov 2016 14:33:53 UTC All use subject to http://about.jstor.org/terms 584 EASTMAN, RANDALL, AND HOFFER SUGGESTIONS We would like to offer the following suggestions for those who might follow us in a similar endeavor. 1. Tie the measuring instrument as directly as possible to the phenomena that causes the environmental damage. If pollution is caused by generation of electric power, as in this case, frame the questions in terms of the price of electric power. Make the vehicle for payment a con- crete, routine behavior, such as the payment of the monthly household electric bill. 2. Devise an instrument that offers the possibility of sharing the burden of payment among the different groups involved. This should cut down the refusal-to-play rate. 3. Use more than one instrument where feasible. Many respondents offended by one payment vehicle may well respond to an alternative in- strument. The second instrument thus provides a reasonably accurate method for estimating the bids of non-respondents to the first instru- ment, and vice-versa. 4. A good non-monetary rank-order environmental-concern scale should also be very useful in estimating bias resulting from resistance to the dollar instrument(s). Measuring concern for environmental quality and willingness to pay for pollution abatement is in its early stages. Thus, the conclusions and suggestions we offer are tentative and subject to change as the field develops. They are offered now in the hope they will be of value to others engaged in this important endeavor. 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