International Journal of Marine Science 2016, Vol.6, No.36, 1-8
2
To study seriously affected fishermen, Sothikuppam and Rasapettai were selected, medium affected fishermen were
selected from Periyakuppam and Sithrapettai villages and low affected fishermen were selected from Parangipettai
and Samiyapettai villages. A sample of 20 fishermen in each village was selected randomly and the sample size was
120.
The affected fishermen were then categorized into serious, moderate and low affected based on the intensity of
pollution and was measured by indicators of number of industries, water quality and shrimp farming. In affected
area, the pharmaceutical industries were the major polluting industries which discharged the waste water and
intruded into sea. All the three indicators were highest in seriously affected fishing with seven industries, 4
milliohms/cm water quality and two shrimp farms. In moderately affected fishing, the pollution was moderate with
five industries, 2 milliohms/ cm water quality and one shrimp farm. Lastly, in low affected fishing, the pollution was
lowest with four industries, 0.50 milliohms/ cm water quality and one shrimp farm.
2.1 Valuation of negative externality- hedonic pricing method
The hedonic pricing method may be used to estimate economic benefits or costs associated with environmental
quality, including air pollution, water pollution, or noise. The method’s main strength is that it can be used to
estimate values based on actual choices. Property markets are relatively efficient in responding to information, so
can be good indications of value. The hedonic pricing technique is a market approach, attempting to assess the value
attributed by buyers to the environmental attributes of a dwelling. It is based on hedonism, in economic language it
means that the hedonic measures the value of some parameters by its effect on the pleasure of the individual to live
in a given region.
The hedonic model involved decomposition of the price of land or of house into the prices of attributes This could be
done by using hedonic price function, which describes the equilibrium relationship between land or house price, p,
and attributes, A = (a
1
, a
2
, . . . .a
n
). The marginal price of attribute in the market is simply the partial derivative of the
hedonic price function with respect to that attribute. In selecting a land or house, buyers equate their marginal
willingness to pay for each attribute to its marginal price.
Utility maximization in hedonic market should satisfy
δp/ δa
i
δθ/ δa
i
where θ is the household’s bid function. The equation implied that in equilibrium, the marginal willingness to pay
for an attribute could be measured by its marginal price, computed from the hedonic price function.
The hedonic model formulated for the present study was of the following
VCL =
0
+
1
X
1
+
2
X
2
+
3
X
3
+
4
X
4+
U
1
where,
VCL – Value of house (in Rs. /ha)
X
1
– Household income (in Rs. /yr)
X
2
– Drinking water quality index (It was assessed by means of taste, soft mess and turbidity)
1-Poor; 2- Average; 3- Good
X
3
– Distance of house from sea (kilometre)
X
4
– House amenities variables
