Economic valuation of air quality in Kenya

Abstract

This thesis employs stated preferences to estimate the economic value of air quality in Kenya through motorized emission reductions in the city of Nairobi. Firstly, it uses the contingent valuation (CV) method to evaluate individuals’ preferences associated with motorized emission reductions in the city together with an account of how these preferences are affected by respondent uncertainty. Secondly, it employs the discrete choice experiments (DCEs) to analyze the implicit prices that motor vehicle owners in the city would be willing to pay towards specific motorized emission reduction attributes. Lastly, the thesis examines the relative performance of several DCE models and how best they are able to account for preference variation in the analysis of choice data. Notably, in the contingent valuation framework, three formats are used to draw preferences from individuals, namely, the conventional payment card format, which assumes that respondents are certain about their preferences; the stochastic payment card and the polychotomous payment card formats, both assume that respondents are uncertain about their preferences. The details of both CV and DCE analysis are discussed in four separate sections that follow, which together complete this thesis. The first section looks at the stated preferences for motorized emission reductions in the city of Nairobi based on the conventional payment card approach. In this case, interval regression analysis is used to estimate individuals’ preferences for motorized emission reductions in the city. The second section compares welfare estimates across stated preference and uncertainty elicitation formats for air quality improvements in the city of Nairobi using welfare estimates elicited through the conventional payment card, stochastic payment card and the polychotomous payment card formats. Both parametric and nonparametric approaches are employed to analyze welfare estimates across the stated preference and uncertainty elicitation formats. The third section investigates the scope effects of respondent uncertainty in contingent valuation with evidence still from motorized emission reductions in Nairobi. Welfare values for motorized emission reductions are also elicited from respondents through the conventional payment card, stochastic payment card and the polychotomous payment card formats and then analyzed using parametric and nonparametric approaches. The fourth and final section looks at the stated preferences for motorized emission reduction attributes in the city of Nairobi based on a discrete choice experiment. In this case, several behavioural models, namely, the multinomial logit (MNL), mixed logit (MXL), scaled multinomial logit (S-MNL), generalized multinomial logit (G-MNL) and the generalized mixed logit (G-MXL) are also estimated to explore their relative performance and how best they are able to account for preference variation in the analysis of choice data.