Economics of Urban Externalities : Analysis of Squatter Settlements in Kathmandu and Quito

This book provides a fresh look at measuring negative externalities in the urbanization process. Meeting the challenges that come hand-in-hand with the contemporary age of rapid urbanization demands more extensive empirical knowledge. While most urbanization research focuses on positive externalities, this book is designed to offer insights into possible sources of negative externalities and the measurement thereof. In economics, the measurement of externalities is a challenging task that demands innovative research designs; however, previous research has failed to capture all of these externalities. The technique described in this book is carefully designed to measure negative externalities, particularly those related to squatter settlements that have been hitherto largely ignored by urbanization literature. The existence of negative externalities and the unintended consequences of rapid urbanization, particularly those related to squatter settlements, can be found in Latin America and Asia. This book provides comparative insights based on extensive primary surveys of households in squatter and non-squatter settlements of Kathmandu, Nepal and Quito, Ecuador. It is considered a case study that will improve the understanding of urbanization issues between Latin America and Asia. Societal benefits can be improved through the reduction of negative externalities. This book helps policy makers in Kathmandu and Quito fine-tune their policies to address the source of urban externality, as well as provide new insights into the nexus between urbanization and development. An investment in the reduction of negative externalities is profitable, thus presenting the government and international partners with a great opportunity. This book contributes to existing literature and will be useful for researchers and students. Preface 6 Acknowledgments 7 Contents 8 About the Author 10 Abbreviations 11 List of Figures 12 List of Tables 14 List of Maps 15 1 Urbanization and Externalities 16 2 Methods of Measuring Externalities 19 2.1 Theory of Urban Externalities 20 2.2 Bid-Rent Model 20 2.3 Externalities Among Households 23 3 Measurement Strategies of Externalities 28 3.1 Introduction and Research Design 28 3.2 Study Setting 30 3.3 Sampling Procedure 33 3.4 Procedures of WTP 35 3.5 Elicitation Methods 36 3.6 Data Management and Analysis 37 4 Externalities in Kathmandu 41 4.1 Incidence of Externalities 43 4.2 Intensity of Externalities 45 4.3 Measuring WTP 49 4.4 Factor Determining WTP 52 4.5 Results of Multiple Regressions 52 4.6 Results of Logit Model 54 4.7 Analysis of Policy Implications 54 5 Externalities in Quito 58 5.1 Incidence of Externalities 61 5.2 Intensity of Externalities 63 5.3 Measuring WTP 66 5.4 Results of Regression Model 68 5.5 Results of Logit Model 69 5.6 Analysis of Policy Implications 69 6 Policy Implications and Conclusions 73 6.1 Policy Implications 73 6.2 Conclusions 75 Appendix 77 About the Book 88 References 89 Front Matter....Pages i-xix Urbanization and Externalities....Pages 1-3 Methods of Measuring Externalities....Pages 5-13 Measurement Strategies of Externalities....Pages 15-27 Externalities in Kathmandu....Pages 29-45 Externalities in Quito....Pages 47-61 Policy Implications and Conclusions....Pages 63-66 Back Matter....Pages 67-83