The Economic Value of the National Meteorological Service in the Korean Household Sector: A Contingent Valuation Study

So-Yeon Park, Seul-Ye Lim and Seung-Hoon Yoo ()
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So-Yeon Park: Graduate School of Energy & Environment, Seoul National University of Science and Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea
Seul-Ye Lim: Graduate School of Energy & Environment, Seoul National University of Science and Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea

Sustainability, 2016, vol. 8, issue 9, 1-13

Abstract: The meteorological service (MS) in Korea is provided by the Korea Meteorological Administration (KMA), a governmental organization. This study attempts to measure the economic value of the national MS in the Korean household sector. Economic theory indicates that the economic value of a service is the area under the demand curve, which is the sum of the actual expenditure and the additional willingness to pay (WTP) for the service. The actual expenditure is well known, but the additional WTP is not. Thus, we assess the additional WTP for the national MS, conducting a contingent valuation survey of 1000 randomly selected households in Korea in 2014. We use a one-and-one-half-bound dichotomous choice question to derive the WTP responses and apply a spike model to deal with WTP responses of zero. The mean additional WTP per household is computed as KRW 860 (USD 0.75) per month and is statistically significant at the 1% level. Given that the monthly expenditure for the MS is KRW 1459 (USD 1.26) per household as of 2013, the economic value of the national MS is computed as KRW 2319 (USD 2.01) per household per month. Expanding the value to the national population gives us KRW 513.6 billion (USD 444.9 million) per year.

Keywords: meteorological service; economic value; contingent valuation; willingness to pay; spike model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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