Contingent behaviour method in the evaluation of externalities: odour emission in a selection and composting centre

Recent regulation on waste fees establishes the change from tax to tariff to guarantee the global covering of costs of collection and selection services. However, the waste law refers only to management and investment costs without including the external costs (such as externalities). For this reason, the system of relative prices is distorted. In this paper, we focus attention on one particular externality: the odour due to waste treatment and we estimate the damage produced by a selection and composting centre. In the literature, we can find different hedonic price and contingent valuation studies that aim to estimate individual willingness to pay (WTP) to improve air quality reducing contaminants with, direct or indirect, effects on human health. However, few studies focus on reversible externalities, such as odour. Therefore, this study intends to improve the literature on this area and, based on the authors knowledge, it is the first attempt to estimate the WTP to reduce odour emissions due to a selection and composting centre. Considering the peculiar case study, we produce our estimates with the relatively new method of Contingent Behaviour.