Willingness to Pay - Essay Example

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The maximum amount of money that people are ready and can afford to pay for specific goods or services such as preventing pollution or improvement of the quality of water among others is called willingness to pay. Natural resources such as water as well as recreational…
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Willingness to Pay (WTP) Number: Introduction The maximum amount of money that people are ready and can afford to pay forspecific goods or services such as preventing pollution or improvement of the quality of water among others is called willingness to pay. Natural resources such as water as well as recreational facilities like parks, green space among others are very essential in the daily lives of human beings. However, these facilities or even resources require maintenance if not value addition. For instance, in order for drinking water in a city to be clean and suitable for human consumption, water treatment among other processes might be necessary. On the other hand, for a park or a green space to remain in good and attractive condition, regular maintenance, and improvements are mandatory. Costs are incurred in order for these services to be effectively provided to the public, hence necessary to charge the public a relatively small sums of money in order to meet the costs. Nevertheless, it is important to consult the public about the amount they are willing to pay for the services, amenity, or a resource hence the term “willingness to pay”.
A good example of willingness to pay scenario is the residents of Boulder Colo in USA. The people of this area were willing to pay up to $234 per home in order to keep a five and a half acres of land preserved for public usage (Americantrials, 2014). This land had not been developed for long hence the community decided to be contributing the large sums of money in order for them to be using it as a park. Their decision could however be termed as highly brilliant since presence of this land as a park made the value of the surrounding properties to dramatically hike in price. Other recreational benefits that were accrued from the existence of the park included travelling costs incurred while visiting the park. Within a period of four years (1995-1999), the property price premiums were summing up to $140.2 million. There was also a net entertaining value of over $7.6 million (Americantrials, 2014).
In conclusion, provision of opportunities for physical activities such as establishment of recreational areas like parks or provision of service may have so much economic benefit to the local government, private developers, and the to the residents of that the neighboring areas. Facilities like parks; availability of quality water among others raises the value of the properties and homes in the nearby area. Moreover, the cost incurred in maintaining such recreational facilities and resources is by far much lower than that incurred while using the land or that resource in a different way like property developments in case of a land.
Americantrials. (2014). Economic benefits of trails. Retrieved on 25th February 2014 from Space-Walkable-Community.html Read More
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