Valuation of environmental regulations and policy changes is usually focused on the achievement of economic efficiency or potential Pareto improvement (PPI): a proposed change or policy is accepted if those who gain from carrying out a specific project or policy could, in principle, compensate those who lose from implementing that policy so no one is worse off. Aggregate measures of value such as aggregate willingness to pay are common measures of economic efficiency. However, in reality, compensations by the gainers to the losers of a policy seldom take place and the disadvantaged must bear most if not all the cost of the adverse effects of the policy change or environmental degradation. Furthermore, willingness to pay is largely dependent on the ability to pay and as such, environmental resources are not shifted to those who only value them the most, but to those who value and can afford them as well. This article focuses on studying the distributional impacts of river contamination and clean up including stated preference evaluation of environmental improvements. Particularly, the issue of concern is whether poor and minority households in the study area have been unjustly exposed to contamination in the river; and therefore, whether the application of different weighting schemes to the benefits (costs) of different demographic groups (especially, minority and low-income) would be justified.


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