Willingness to Pay for Enhanced Water Security in a Rapidly Developing Shale Gas Region in China

Abstract

With the rapid development of shale gas exploration (SGE) in China, there is an urgent need to evaluate the public’s preferences with respect to the environmental risks that go along with the exploration, which have not yet been studied in the literature. This study aims to estimate local residents’ willingness to pay (WTP) for a water security-enhanced scenario in the Fuling shale gas field, Chongqing, China. Using the double-bounded contingent valuation method, we estimate that the annual mean WTP is 32.655 Chinese yuan per year per household, which accounts for 3.80% of the basic household gas bill. The results also show that WTP is significantly influenced by the socio-economic characteristics of the respondents, including the age of the respondent, household location, household income, and primary source of household income. Moreover, the respondents’ satisfaction with respect to the environmental impacts caused by SGE also has negative influences on the WTP. Thus, our analysis estimates the affected public’s benefits during SGE and provides insight into the relevant policymaking process.