Analysing demand for environmental quality: a willingness to pay/accept study in the province of Siena (Italy)

The province of Siena, Italy, enacted a New Garbage Plan (NGP) with the objective of increasing separate waste collection (SWC), shutting down six landfills and increasing incineration. The aim of the paper is to evaluate costs and benefits of the NGP. The hypothesis is that willingness to pay (WTP) should reflect the value to the community of having better environmental quality, according to the Contingent Valuation literature. The paper reports the results of a Contingent Valuation (CV). The sample was divided into two subsets, firms and households. Through the information gathered via a detailed questionnaire, parametric and nonparametric estimates were elaborated to analyze the WTP of the population for the benefits flowing from increased SWC, increased incineration and shutting down of landfills. These values were expressed as a share of the tax actually paid. Although a small subset of firms and households valued increasing incineration less positively requesting a compensation, on the whole interviewees (with large differences between firms and households) had a net positive WTP for the provisions included in NGP. Parametric estimation procedures enabled us to analyse the economic as well as social and demographic factors affecting these results. These elements are useful for computing a value for the waste charge that also reflects external effects. Finally, we estimated household income elasticity of WTP for the increase in SWC and found less than one: environmental quality is not a luxury good.