This study attempts to estimate economic value of cheonggyecheon restoration. A dichotomous choice Contingent Valuation Method is employed since the good in question is a nonmarket good the value of which is not determined in a market.
In order to in...
This study attempts to estimate economic value of cheonggyecheon restoration. A dichotomous choice Contingent Valuation Method is employed since the good in question is a nonmarket good the value of which is not determined in a market.
In order to increase statistical efficiency, a double bound questionnaire was used for the 123 samples. The statistical data so obtained were analyzed using maximum likelihood estimation(MLE) of linear logit model. The resulting estimated value of willingness-to-pay(WTP) for cheonggyecheon restoration is 8,890 Korean Won.
Accordingly multiplying the WTP per family by the total number of family in 2003 produced the total amount of WTP for cheonggyechon restoration as approximately 32.7 billion won, or 392.8 billion won a year. This estimated benefit for the restoration is much more than the cost reflected by Seoul city's budget for the restoration.
Assuming 3 years and half for the length of construction works, the total amount of money to be spent will be 1.3748 trillion won. In accordance with this study showing benefit exceeding cost, the restoration project is economically justified. This conclusion also seems to be shared by a majority of Seoul citizen as shown by the recent favorable public opinion on the project.