Introduction and Context
According to the study report by Yoo and Chae, ozone pollution is a serious issue in Seoul, Korea: “The number of ozone warnings has increased from 2 in 1995 to 10 In 1996, to 19 in 1997” (49). The main reasons for such an increase were the rapid urbanization, industrialization, and population growth (Yoo and Chae, p. 49). Moreover, the landscape of the city provides a welcoming environment for air contamination: The area is surrounded by mountains, causing the air pollutants to pool and resulting in high levels of harmful gasses, such as carbon monoxide (CO) and sulfur dioxide (SO) (Yoo and Chae, p. 49). Seoul residents have previously combatted the high levels of air pollutants by changing to natural gas and low-sulfur diesel fuel, and these efforts proved to be effective—the levels of CO and SO decreased by 53.8 percent and 78.4 percent, respectively, in 8 years. However, the ozone levels increased by 77.8 percent during the same period (Yoo and Chae, p. 50). Yoo and Chae argue that reducing ozone pollution is vital for the well-being of the population since high ozone levels are linked with increased rates of mortality and respiratory diseases (p. 50). The central aspect of the ozone pollution control policy is the use of cars, particularly diesel vehicles, as they account for about 81 percent of the current pollutant emissions: “Policy-makers are currently addressing the probable effectiveness of regulation and other measures to control ozone pollution, such as the installation of filtering systems for large diesel vehicles” (Yoo and Chae, p. 50). If the proposed policy is implemented, the costs will be paid by the government straight away with the expectation that increased taxes and other charges will generate enough profit to cover the initial investment (Yoo and Chae, p. 50). The cost and benefit analysis (CBA), therefore, could help to analyze the repayment prospects and to evaluate the policy. Thus, the purpose of this study is to use an environmental valuation method “to measure the economic benefits of implementing an ozone policy for residents of Seoul, aiming to provide policy-makers with at least a preliminary evaluation of the proposed policy” (Yoo and Chae, p. 51).
Methods and Data
The study is based mainly on the principle of WTP, or the consumer’s willingness to pay the costs of the ozone pollution control policy, and it aims to determine the amount of the annual benefit that could be gathered from Seoul residents by establishing an amount that each household would be willing to contribute. To achieve this, the study takes the form of a questionnaire, completed by more than 400 respondents, chosen randomly by a professional polling company based in Seoul (Hana Marketing Service, Inc.). The same firm participated in the questionnaire designing process and provided 40 experts to conduct the interviews. The questionnaire was completed during face-to-face interviews; as Yoo and Chae state, they “chose to use person-to-person interviews for the CV survey for cultural and practical reasons” (p. 52). For instance, it has been established that mail surveys are unpopular in Korea, and they tend to generate a lower response rate or no responses at all (Yoo and Chae, p. 52). The questionnaire design included many features to ensure smoothness and clarity as well as the reliability of the data. For example, open-ended questions were discarded in favor of dichotomous choice questions (Yoo and Chae, p. 53). In addition, single-bonded questions were changed to double-bonded questions with a higher number of possible outcomes, thus ensuring greater flexibility for the respondents and, consequently, more precise results. The questionnaire was kept short and close to the purpose; the participants were given all the necessary information about the costs and benefits of the proposed ozone pollution control policy and were asked whether or not they would contribute a set amount, ranging from 10,000 to 40,000 Korean won per household, towards the project. The question was then repeated with a doubled sum if the answer was positive or with half the amount if the response was negative. The results were sorted by the initial amount in the question and the four possible outcomes: “Yes-yes,” “yes-no,” “no-yes,” and “no-no” (Yoo and Chae, p. 54).
Results and Discussion
The survey yielded 400 clean responses and concluded that “72 percent favored the policy at an annual cost of 10 000 Korean won, whereas only 14 percent approved of it at the 40 000 Korean won level” (Yoo and Chae, p. 56). It was established that the responses depended greatly on the individual characteristics, such as age, gender, and education level; there was also a clear positive correlation between the household income and the WTP amount (Yoo and Chae, p. 56). Nevertheless, the majority of the capital’s population would contribute to the proposed policy, which would eventually enable them to raise a high amount of benefits. The estimated lower mean number of 16,092 Korean won per household per year would generate 326.42 billion Korean won during the 8 years, whereas the higher mean amount of 20,433 Korean won per household per year would generate 414.48 billion Korean won within the same timeframe (Yoo and Chae, p. 58). The costs of the policy, on the other hand, are also evaluated in the study. According to Yoo and Chae, the overall amount spent on ozone pollution control in Seoul over eight years would be 159.90 billion Korean won. Thus, the net benefit amount for the lower mean cost per household would be 166.52 billion Korean won, whereas the net benefit amount for the higher mean cost per household would be 254.28 billion Korean won. Yoo and Chae conclude, “The preliminary results show that the ozone pollution control policy in Seoul is socially profitable […] The benefits are enough to move the Seoul economy from where it is today to where it needs to be to meet the goal” (p. 58).
Conclusions and Criticisms
Overall, the study is well planned and thorough, and it provides precise reliable results. However, there are still some drawbacks to it. For example, as the scholars themselves note, “A complication involved in the cost data on ozone pollution control […] is that they were not estimated for ozone pollution control only” (Yoo and Chae, p. 58). Another limitation is the random population sample size. Given the population size of the city, the 400-person sample might not be efficient in making evaluations with regard to the entire community. These limitations are minor, although they could still impact the results of the study. On the whole, the present study shows how the proposed policy would be beneficial not just for the environment but also for the economy of Seoul. The authors recommend proceeding with implementing the policy immediately, explaining that the public would not oppose the increase in costs resulting from it, and thus they provide an excellent example of the use of environmental valuation in the CBA analysis of environmental action policies.
Works Cited
Yoo, Seung-Hoon, and Kyung-Suk Chae. “Measuring the economic benefits of the ozone pollution control policy in Seoul: results of a contingent valuation survey.” Urban Studies 38.1 (2001): 49-60. Print.