AUTONOMUS UNIVERSITY OF SAN LUIS POTOSI FACULTY OF

AUTONOMUS UNIVERSITY OF SAN LUIS POTOSI FACULTY OF ECONOMICS Jesus Pulido-Castañon Jaime Martinez-Garcia Eduardo de la Maza

“MEASURING ENVIRONMENTAL IMPACT: The use and viability of the CV method in the case of Mexico”

ENVIRONMENTAL RESOURCES MANAGEMENT p CONCEPT OF SUSTAINABLE DEVELOPMENT (UNCED, 1987) p MEXICAN LEGISLATION: -POLITICAL CONSTITUTION ARTS. 25, 26, 27 AND 115 -NATIONAL WATER LAW:

Environmental Policies p Most Environmental Policies are based on three basic principles: 1. 2. 3. Sustainability Polluter Pays Principle (PPP) Precautory Principle

Environmental Policies Implementation p Correct (or near to correct) Valuation of Environmental Assets: - Identification Classification Valuation

Types of Methods p p Change-in-productivity approach Replacement/relocation costs Travel cost Contigent Valuation (Dixon, JA et al, 1995)

Contingent Valuation p In order to perform properly, this technique requires of a working (or near to working) market in wich the consumer has information on choices and can implement them.

Factors Affecting Market Performance n n Market Distorsions Externalities Protectionist policies Institutional underdevelopment (Gillis et al, 2001; Todaro and Smith, 2006)

Current Characteristics of the Mexican Economy p From 1982 onwards, the Mexican economy has changed its model: from an structuralist approach to an open-market economy p This structural reform has derived in some problems: therefore this transition is still in a process of reaching a pure market functioning economy. p Therefore, a main issue is: Is it feasible that an environmental impact measuring instrument, such as the CV method could work on economies such as the Mexican Economy?

Procedure - technique: CV method p p p Sample: Non probabilistic, stratified; survey of 450 households (p=. 05) in 29 boroughs in the city of San Luis Potosi, Mexico. Applied on three goods: Automobiles Corn tortilla (an basic staple food) Drinking tap water Model: Linear regression, statistical analysis using SPSS version 13.

p Measurement of consumer surplus according to income level; three results, one for each good.

Results: p 1. Automobile: y=763. 639 -977. 861 x p 2. Corn Tortilla: y= -5. 286+75. 348 x p 3. Water(Tap)Drinking: y= 68. 982 -109. 682 x

p Conclusions: In the case of the Mexican economy, is possible to use the technique of CV as a form of obtaining information regarding the opportunity cost of an environmental, basic resource. This information is obtained from the difference between the price paid to INTERAPAS (the inter-municipal water company) for tap water (which is not been provided) and the price paid for bottled water. p According to this application of CV method, the price system in the Mexican market is performing well its 5 functions in the allocation of resources

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