Using stated preferences to estimate the environmental benefits of using biodiesel fuel in diesel engines

Using biodiesel fuel to reduce emissions from diesel engines is an area of increasing interest. Many environmental benefits associated with biodiesel are not traded in markets and their estimation requires economic valuation methods applied to non-market goods and services. This paper presents the results of a contingent valuation survey conducted in 2006 in two Ohio regions to estimate willingness to pay for air pollution reduction arising from using biodiesel fuel in diesel engines. The double bounded parametric formulation was used to estimate mean WTP ranging from $157 to $457. These results yield estimated aggregate benefits ranging from $123 to $429 million and can be used as a starting point for cost-benefit analysis.