Electricity deregulation and the valuation of visibility loss in wilderness areas: A research note.

Visibility in most wilderness areas in the northeastern United States has declined substantially since the 1970s. As noted by Hill et al. (2000), despite the 1977 Clean Air Act and subsequent amendments, human induced smog conditions are becoming increasingly worse. Average visibility in class I airsheds, such as the Great Gulf Wilderness in New Hampshire’s White Mountains, is now about one-third of natural conditions. A particular concern is that deregulation of electricity production could result in further degradation because consumers may switch to lower cost fossil fuel generation (Harper 2000). To the extent that this system reduces electricity costs, it may also affect firm location decisions (Halstead and Deller 1997). Yet, little is known about the extent to which consumers are likely to make tradeoffs between electric bills and reduced visibility in nearby wilderness areas. This applied research uses a contingent valuation approach in an empirical case study of consumers’ tradeoffs between cheaper electric bills and reduced visibility in New Hampshire’s White Mountains. We also examine some of the problems associated with uncertainty with this type of analysis; that is, how confident respondents are in their answers to the valuation questions. Finally, policy implications of decreased visibility due to electricity deregulation are discussed