AUTONOMUS UNIVERSITY OF SAN LUIS POTOSI FACULTY OF ECONOMICS Jesus Pulido-CastañonJaime Martinez-GarciaEduardo de la Maza

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

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

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

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

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

Contingent Valuation  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 Market Distorsions Externalities Protectionist policies Institutional underdevelopment (Gillis et al, 2001;Todaro and Smith, 2006)

Current Characteristics of the Mexican Economy  From 1982 onwards, the Mexican economy has changed its model: from an structuralist approach to an open-market economy  This structural reform has derived in some problems: therefore this transition is still in a process of reaching a pure market functioning economy.  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?

 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. Procedure - technique: CV method

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

Results:  1. Automobile: y= x  2.Corn Tortilla: y= x  3.Water(Tap)Drinking: y= x

 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.  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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