A city is about to build a new sanitation plant. It is considering two sites, one located

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A city is about to build a new sanitation plant. It is considering two sites, one located in a moderately well-to-do neighborhood and the other in a low-income neighborhood. Indeed, most of the residents in the latter neighborhood live below the poverty line. The city’s sanitation engineer is adamant that “the city needs the new plant and it has to go somewhere.” However, he is indifferent as to which neighborhood it is located in. The plant would operate at the same cost and as efficiently in either neighborhood, and about as many people would be affected by the air pollution emitted by the plant. The city hires an economist to study the two sites. The economist finds that the plant would cause a considerably larger fall in average property values in the well-to-do neighborhood than in the low-income neighborhood, given the more expensive homes that are located in the former. Consistent with this, a contingent valuation study that the economist conducts finds that willingness to pay to avoid the sanitation plant is substantially higher in the well-to-do neighborhood than in the low-income neighborhood.
The residents of the poor neighborhood strongly prefer that the plant be built in the well-to-do neighborhood. In the face of the economist’s findings, what sort of arguments might they make?
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Cost Benefit Analysis Concepts and Practice

ISBN: 978-0137002696

4th edition

Authors: Anthony Boardman, David Greenberg, Aidan Vining, David Weimer

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