Regional Water Quality-Enhancing Policy and Regional Welfare = The Case of the Han River Region,Korea

다국어 초록 (Multilingual Abstract)

Since pollutants are generated in the production and consumption of commodities, a policy to pursue the better environmental quality through the reduction of pollutants negatively impacts economic activity. This can be considered a social cost of the environmental policy. Conversely, it is also important to recognize that there exists a positive relationship between people`s utility and environmental quality since such utility is largely influenced by environmental quality. An increase in people`s utility is a social benefit of environmental policy. Hence, for an accurate evaluation of environmental policy, resulting social cost and benefit must be simultaneously taken into consideration. However, the problem lies in the measurement of social costs and benefits since the market for the environment is not basically to exist. This paper attempts to specifically evaluate the environmental policy in terms of both social costs and benefits. The decrease in the value-added of a regional economy is considered a social cost while the community`s enhanced utility is considered a social benefit. An environmental sector endogeneized input-output model is constructed for measuring the social costs, whereas the contingent valuation method is employed for measuring the social benefits. Moreover, the paper focuses on the Han River Region which is the main economic region of Korea, and restricts the environmental problem to water pollution for simplicity. The paper aims to demonstrate that the water quality enhancing policy for the Han River Region is welfare-improving as a whole.