Valuing the Environment in Developing Countries: Modeling the Impact of Distrust in Public Authorities’ Ability to Deliver on the Citizens’ Willingness to Pay for Improved Environmental Quality

In this paper we employ the choice experiment method to estimate local citizens’ valuation of a public intervention which proposes to improve the quality of an important environmental resource, namely the river Ganga in India. 150 randomly selected citizens of the municipality of Chandernagore located on the banks of the river Ganga in West Bengal are interviewed to elicit their willingness to pay (WTP) in higher municipality taxes for an intervention that proposes to improve the quantity and quality of wastewater treated by the local sewage treatment plant (STP). The findings reveal that almost all (98%) of the citizens value of the quality of the water and the environment in the river Ganga, though a great majority (90%) protested the intervention, by not choosing the improved STP scenario in at least one of the eight hypothetical markets they were asked to participate. When asked their reasons for not preferring the improved scenarios, 92% of them stated that they do not trust the authorities to manage the funds generated through additional taxes efficiently and effectively. The protest responses were controlled for with the use of the nested logit model. The results reveal that the citizens are willing to pay significant amounts to ensure that the intervention takes place, and an improved STP treats larger amounts of wastewater to a higher quality before discharging it to the Ganga. Therefore in order to improve the wastewater management services and the related environmental quality in the water bodies in which treated wastewater is deposited into, the municipalities could rely – at least to some extent - on their citizens’ WTP higher taxes for provision of improved services. In order to be able to capture this WTP however, municipalities’ performance, trustworthiness and accountability, as well as the citizens’ perceptions of these should be improved.