Residents’ preferred measures and willingness-to-pay for improving urban air quality: A case study of Hanoi city, Vietnam | Emerald Insight

4.2.1 The estimation of willingness-to-pay

The design of this CVM exercise would give respondents an opportunity to “purchase” the improvements in air quality by paying for the measures that they preferred to be implemented to improve air quality. Figure 1 presents frequencies of WTP amount. Of 212 respondents, 118 respondents (∼56%) were willing to pay for improving air quality of Hanoi city. Among the positive WTP respondents, 64 respondents (∼30%) were willing to pay an amount of less than 250,000 Vietnamese dong; 48 respondents (∼23%) had an WTP amount in the range of 250,000–650,000 Vietnamese dong; only 6 respondents (∼3%) were willing to pay from 650,000 to 1 million Vietnamese dong. This is consistent with the economic theory of decreasing demand curve.

In our CVM survey of 212 respondents, 94 respondents, accounting for 44% of the full sample, had a zero WTP. A follow-up question was included in the questionnaire to understand reasons for the zero WTP. The frequency of respondents’ reasons is reported from high to low as follows:

1. I support the improvements; I do not really believe that the collected money would be spent correctly on improving air quality: 77%.

2. I support the improvements, but the Government is responsible to pay all costs of the improvements: 48%.

3. I support the improvements, but I do not agree with paying the fee through electricity bill: 14%.

4. I support the improvements, but cannot afford a payment of any amount: 4%.

5. The improvements do not have any benefits to me: 4%.

Of the zero WTP respondents, the top reason was that they did not really believe that the collected money would be spent correctly, the second most frequently chosen reason was that the Government had to pay the costs of the improvements, and the third was that respondents did not agree with paying the fee through electricity bill. These three reasons, combined with the zero WTP, were used to identify a protest vote. This indicates that respondents with the protesting perception did not accept the concept of WTP. In our CVM exercise, 89 respondents (∼42% of the total respondents) were identified as protesting voters. Our result of a large proportion of protest votes is similar to findings in CVM exercises in China (Wang and Zhang, 2009; Wang et al., 2015) and Iran (Hadian et al., 2017). It seems that when compared with developed countries, a large proportion of respondents having no incentive to bear the costs of improved air quality in developing countries indicate a relatively low environmental consciousness (Wang and Zhang, 2009). The lack of transparency and accountability of governments in developing countries may also be reasons for high proportion of protest votes.

To reduce the effect of hypothetical bias, responses to the certainty scale were used to switch the uncertain positive WTP to zero WTP. The changes in WTP values could result in the generation of more conservative measures of WTP. With the revision in WTP values, the mean value of the WTP (including zero bids) is 148,000 Vietnamese dong with the 95% confidence interval of 119,600–175,600 Vietnamese dong. This mean WTP accounts for 0.09% of annual household income. In the case of excluding zero bids, the mean value of the WTP is estimated at 282,000 Vietnamese dong with the 95% confidence interval of 242,500–321,300 Vietnamese dong. The mean WTP excluding zero bids is equivalent to 0.16% of annual household income.

Our WTP estimate including zero bids is very conservative since the certainty scale was used to switch the uncertain positive WTP to zero WTP. If excluding zero bids, the WTP value in our open-ended CVM exercise is similar to the WTP estimates of 0.15% of household income for improving air quality in Ho Chi Minh city (the biggest city of Vietnam) (Ngoc et al., 2015). Our WTP estimate is also closed to the WTP estimates of 0.2% of household income in an open-ended CVM survey conducted in an African city (Donfouet et al., 2014). However, the estimate in our study is relatively lower than the WTP values of 0.4–0.7% of household income, which were estimated from open-ended in some Chinese cities (Wang and Mullahy, 2006; Wang et al., 2006; Wang and Zhang, 2009). A possible reason for the higher WTP estimates in China is that the issue of air pollution in big cities of China has been well known as more severe than in the other regions of the developing world.