Willingness to Pay to Reduce the Ecological and Health Risks from Water Pollution in Emerging Urban Regions: The Case of the Red River Delta in Vietnam

The soaring economic development of export activities of handicrafts centralized in emerging urban regions in Vietnam has accelerated the increase in the occurrence of diseases and threats to ecosystems induced by water pollution. We design a discrete choice experiment to elicit the willingness-to-pay of handicraft enterprises to restore the environment and diminish health risks from polluted wastewater through water quality improvement under different scenarios. Estimates from five latent classes reveal that one-half of entrepreneurs strongly value the provision of wastewater treatment services, and their decisions are mostly driven by preferences to reduce the risk of sickness caused by water pollution. This finding lends support to the argument that self-interested preferences predominate pro-environmental behavior in the readiness to pay for water quality services. While entrepreneurs’ preferences attributed to ecological remediation seem to vary according to their educational background, the status-quo group shows low environmental awareness. This divergent behavioral pattern suggests that the design of wastewater management policies requires a mixture of measures that aim at different groups of individuals pursuing economic incentives and the creation of awareness.