Factors Influencing Compensation Demanded for Environmental Impacts Generated by Different Economic Activities

Abstract

This work advances the understanding of compensation demanded for environmental impacts on atmosphere, lakes and rivers, soil, and ocean generated by mining, urban, fishing and agriculture activities. Our aims are to determine whether compensation demanded depends on the standard variables used in the field of risk perception (as perceived risk, public acceptability and trust in regulating authorities), and to explore whether these relationships depend on the environment affected and on the economic activity generating the impacts. General Linear Models were used to analyze survey responses from 427 citizens of Santiago, Chile. Results showed that compensation demanded depends on perceived risk, acceptability, and on the economic activity, but not on the environment affected. Acceptability depends on trust in authorities, on perceived risk and on the economic activity. Perceived risk depends on trust, the economic activity and the environment affected. Overall, environmental impacts from the mining industry are perceived as riskier, less acceptable, and have a higher compensation demanded than those generated by the other sectors. These results suggest that to achieve sustainable development, regulations should consider not only environmental impacts but also the economic activity originating them.