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Upgrading municipal environmental services to European Union levels: a case study of household willingness to pay in Lithuania

Published online by Cambridge University Press:  17 September 2003

Randall Bluffstone  and
J.R. DeShazo
Randall Bluffstone
Affiliation:
Department of Economics, University of Redlands, California. Email: Randy_Bluffstone@Redlands.edu
J.R. DeShazo
Affiliation:
School of Public Policy and Social Research, University of California at Los Angeles, California. Email: deshazo@ucla.edu
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Abstract

Lithuania is one of ten countries in Central and Eastern Europe that is aligning its environmental policies with those of the European Union (EU). The costs of harmonizing environmental policies are expected to be extremely high and to fall disproportionately on local governments. One policy option for financing these service upgrades is to use increased tariffs. We evaluate the feasibility of this strategy by estimating household willingness to pay for upgraded landfill, sewerage, and recycling programs. We then compare estimated benefits with costs from the literature. We find that household willingness to pay is substantial for upgraded landfill management and expanded sewerage service, but virtually zero for the two recycling programs considered. Relative to costs, households are willing to pay approximately 80–90 per cent of costs for landfill improvement, but less than 10 per cent for upgraded sewerage service and recycling programs. These results suggest that targeted subsidies will be critical to fund the municipal environmental expenditures required for Lithuania to join the EU.

Type
Policy Options
Information
Environment and Development Economics , Volume 8 , Issue 4 , October 2003 , pp. 637 - 654
Copyright
© 2003 Cambridge University Press

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Footnotes

The authors would like to thank the Government of Denmark for its support through the Danish Environmental Protection Agency's program of assistance to the Government of Lithuania. We would also like to express gratitude to the Government of Lithuania, and particularly to Arvydas Dragunas of the Ministry of Environment. The support of Glen Anderson, Gretta Goldeman, Ulrik Dan Weuder, Daiva Semeniene, Simona Daugintiene and all the staff at the Lithuanian firm SIC are also gratefully acknowledged.