Closure of a Landfill Site in Ethekwini (Durban) Municipality: A Test for Strategic Bias in Contingent Valuation

Abstract

The Contingent Valuation Method (CVM) is used to estimate the benefits of hypothetically closing a landfill site known to be generating considerable negative health and amenity externalities to nearby residents. Within this framework, a test for strategic bias is undertaken. Standard consumer theory explains that subjects have incentives to deliberately misstate their valuations when paying for public goods and open-ended responses used in CVM for valuing non-marketed goods and services are thought to be vulnerable to such strategic behaviour. Evidence for strategic bias was found and the willingness to pay (WTP) to close down the site and construct a new landfill site outside the city was estimated to be R60.45 per household per month with age and income significantly influencing the WTP bid. Aggregate WTP was R12 090 per month.

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