CHAPTER 1

INTRODUCTION

1.1 Background of Study

The gift of nature contributes to the sustenance of life on Earth. The environment
includes both living and nonliving organisms that adapt to their surroundings, such as
soil, water, animals, and plants. Human well-being and the survival of all species on
Earth depend critically on environmental quality. Because of the wide variety of life
forms on Earth, every living thing here depends in some way on the natural world around
it for sustenance. Consequently, everyone must work to preserve and safeguard our
ecological system. Human population growth each year increases the strain on the
planet's water supply. Instead, their quality is getting worse. Humans need fresh water
that can be replenished for drinking, watering crops, making things, and other industrial
uses such as waterfowl, transportation, recreation, and getting rid of waste. We all know
that we need water to live and that clean water is essential for understanding the natural
world. Pollution in the world’s rivers, streams, and lakes makes drinking water unsafe
and hurts wildlife.

Nature is affected in two ways by water pollution. It harms both the environment and
people. Corruption has a wide range of negative consequences for both aquatic organisms
and people. Rivers that are polluted have an unpleasant smell and little to no plant or
animal life. Discharging hot water from cooling engines in industrial settings is another
cause of water pollution. As a result, it raises the temperature of the water while slowing
down organisms’ metabolic rates. So, it will increase their need for oxygen. Pollution's
effects are more obvious, so when too many pesticides, herbicides, and fertilizers get
washed into rivers by rain, it's a big health risk. Eutrophication is further exacerbated by

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excess phosphorus in fertilizers, and it is extremely hazardous to marine life when rinsed
in water.

According to the World Water Development Report UNESCO 2021, freshwater

consumption has increased by around 1percent annually since the 1980s and has
increased sixfold over the preceding century. As a consequence of increased water use,
water quality is experiencing major issues. As a result of industrialization, agricultural
output, and urban life, the environment has been damaged and contaminated. This has a
detrimental effect on important water sources, which has a negative effect on human
health and long-term societal development. Around 80 percent of industrial and
municipal wastewater is dumped into the environment without being cleaned first. This is
bad for ecosystems and people's health.  Because of the severe lack of sanitation and
wastewater treatment systems, this percentage is higher in the least developed
nations. The Water Quality Index (WQI) given in table 1.1 is used to measure water
quality in a country.

Table 1.1: Classification water quality                  

WQI Value Quality Class Description and treatment process

95-100 Class I Excellent water quality and no necessary treatment

89-94 Class II Very good quality and requires a standard physical
treatment process
80-88 Class III Good quality and requires a conventional physical
and chemical treatment process
65-79 Class IV Medium water quality which need an advanced
treatment process
45-64 Class V Polluted water (used for drinking purposes only)
0-44 Class VI Very polluted water not usables for drinking purposes

Sources : Environment and Climate Change, Canada

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As a country's gross domestic product (GDP) rises, its water quality deteriorates. During
China's industrial revolution, for instance, the rising demand for water from the country's
growing population and economy exerts tremendous pressure on the country's finite
freshwater supplies. Moreover, extensive water contamination resulting from industrial
operations exacerbates water shortages. (YuananHu, 2013).

The phrase "willingness to pay" is used in economics. This is the highest price a customer
is willing to pay for a product or service. A business can set its prices to maximise profits
and customer satisfaction by determining the customers' willingness to pay. A curve
accurately represents each person's willingness to pay, which is the key difference. The
price range reflecting customers' average or mean willingness to pay is more significant
when setting prices for goods and making business decisions. The general economic
climate, among other macroenvironmental elements, may affect consumers' propensity to
spend.

1.2 Problem Statement

In 2019, the tourism sector in Malaysia provided 6.7 percent of the country's gross
domestic product. In 2020, however, this reduced to 2 percent. Tourism is one of
Malaysia's primary employment industries, employing over one-fourth of the country's
labour force. The tourism industry in Malaysia would bring in RM197.9 billion in "gross
value-added of tourism industries" (GVATI) in 2021, which would be 12.8% of GDP,
down from 14.1 percent in 2020 (Department of Statistics Malaysia Official Portal).

Cameron Highland is a one of most popular place tourism places and among most
beautiful highlands in Malaysia. This place, one of the favorite destinations for domestic
and international tourists, entices visitors with an excellent temperate environment and a
wide range of thrilling activities and attractions. Cameron Highlands' top attractions
include breathtakingly gorgeous tea plantations, immaculate old colonial homes, a mossy
forest and tropical waterfalls. Table 1.2 shows the number of visitors in Cameron
Highland. According to statistics collected by Pahang's official tourist website, there has

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been a rise in travelers between 2014 and 2016. The number of visitors fell by 9 percent
in 2018.

Table 1.2 Number of visitors in Cameron Highland (2014-2019)

YEAR TOTAL OF VISITOR

2014 9,412,531
2015 10,533,711
2016 12,825,528
2017 14,827,961
2018 13,431,842
2019 13,992,313
Source: Official portal of Tourism Pahang

Cameron Highland's rivers have been irreversibly affected by pollution. Regional

Environment Awareness Cameron Highlands (REACH) reports that just 10 percent of
123 rivers are in good condition. The biologically dead rivers are Sungai Tringkap,
Sungai Icat, and Sungai Parang. The Interim National Water Quality Standards (INWQS)
classified rivers into six classes, with class I being the "best" and class V being the
"worst," as shown in table 1.1.

Sungai Bertam, Sungai Telom, and Sungai Lemoi are the three largest rivers in the
Cameron Highlands, with a total of 123 minor rivers feeding into them. Sungai Pahang
and Sungai Perak are the rivers that give water to the lowlands, including the homes of
people who live in Pahang, Selangor, and Perak. There shouldn't be a significant
difference in the chemical make-up of rainwater and river water. Rivers, much like
sewers, have the sole purpose of carrying precipitation from higher elevations to lower
ones.

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One of the causes of rivers pollution in Cameron Highlands is land clearing. Farmers who
either lack permission or are breaking the law often remove large tracts of land for
agricultural development. On the weekends, heavy equipment is also visible in operation
when it is not permitted to be used. A portion of the property is being cleared on hill
slopes, which are definite "class three" or "class four" slopes with an inclination angle
greater than 30 degrees. A landslide or soil erosion might result from this. For example,
in an area of Sg. Menson where gully erosion is already evident, land has been destroyed
at an alarming pace.

Cameron Highlands is famous for its agricultural activities. So poor agriculture practices
also became a reason for river pollution. Because of the abundance of nutrients deposited
in the soil when rivers overflow, river floodplains are productive, which has led to a
concentration of agricultural activity in their vicinity. Agriculture intensification is often
related to the growth of soil erosion, salinity, and sediment loads in water, as well as the
improper use of agricultural inputs (such as fertilizers) to improve productivity.
Agriculture-related pollution may have an impact on air, water, food, feed, farms, the
natural world, and the environment. (Agency, 2005). Because of concerns about
pesticide contamination, several farmers choose not to compost their agricultural waste.
Dumped here, it will be swept downstream by Sungai Terla after the next big rain.
Toward the Blue Valley, the same may be viewed from Ulu Telum.

Household waste also contributes significantly to the pollution of rivers. Food waste,
glass, paper, plastic, and other materials may sometimes enter aquifers but discharge via
shallow river flows. Reducing wastewater contamination is made possible via
purification. Before discharging water into rivers and seas, sewage discharges are routed
to treatment plants to remove impurities. In terms of solid waste generation, population
and tourist growth, as well as the development of the Cameron Highlands, have
contributed to an increase (Aik DHJ, 2021).

Researchers from the University Kebangsaan Malaysia discovered traces of hazardous

organochlorine pesticides in the surface waters of two rivers which are Bertam and Terla.
On 6 March 2015, they held a seminar in Cameron Highlands to talk about these findings
with people from the public and the government. Because OC compounds bioaccumulate

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inside living creatures, and it is recognised that they may harm a person’s health even
when exposed to them at low doses over long periods. So, this issue can cause endocrine
system disruptions and act similarly to hormones such as estrogen.

Agriculture in Malaysia is characterized by excessive fertilizer and waste application

rates, resulting in environmental damage (Neda Tiraieyari, 2014). So much research has
been on the Cameron Highland rivers. For example, (Mahdieh Eisakhani, 2009), their
research focus on the Bertam river basin enhanced organic matter intake into the river
system. It comes from sewage and fertilizers, as well as point and non-point pollution
sources. The results show that this organic pollution causes a lot of bio-contamination,
which can lead to bacteria and viruses that can be deadly. Urban areas with poorly treated
or untreated sewage that is poured into the river are also to blame.

Other than that, (EISAKHANI, 2012) stated that the water quality of rivers in the
Cameron Highlands has deteriorated dramatically, owing to non-point pollution causes
like agricultural land clearance, excessive pesticide, and fertilizer use, building activities,
and urbanization. As a result of this research, a conceptual non-structural Best
Management Practice (BMP) for enhancing river water quality in the Cameron Highlands
has been proposed.

Similar research has been done by, (M. Eisakhani, 2011) stated that agricultural clearing,
abuse of pesticides and fertilizers, and urbanization have all harmed the quality of water
in the rivers in the Cameron Highlands. The primary causes of this reduction in water
quality are non-point pollution sources (NPSs). Because NPSs are so diverse and difficult
to identify, estimating them is difficult. GIS information and pollution loads in the study
area were combined using the Cameron Highlands Master Plan (2006–2010). As part of
non-structural management for this research area, it was suggested that they define and
provide technical advice, as well as set up demonstration farms and give farmers
incentives to use sustainable agricultural management methods.

In this study, will focus on the willingness to pay of households to improve river quality
in the Cameron Highlands. Do they feel satisfied with the rivers in the Cameron
Highlands and are they willing to pay additional prices for upgrading the facilities and
technologies for river monitoring? To measure the willingness to pay (WTP) and

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determine the factor of river pollution among households. This will improve river quality,
which will benefit every home and the economy in the future.

1.3  Research Objective

The general aim of this study is to identify the willingness to pay of households to
improve the quality of the river in Cameron Highland. In this study, four specific
objectives will be addressed:

I) To identify the demographic of a household,

II) To evaluate the willingness of Malaysian households to pay to prevent river
pollution.
III) To investigate the level of awareness among Malaysian households regarding
river preservation.
IV) To assess respondents' satisfaction with river pollution in Cameron Highland

1.4 Significance of study

Based on the findings of this study, the researcher will know the number of
households that would be willing to pay for improved river quality. At the same
time, in this research, we can identify the factors that determine the willingness
and unwillingness to pay. This research will estimate the mean WTP of Malaysian
households. Other than that, this study also evaluates visitors' satisfaction levels
toward the rivers in Cameron Highland. This will be very helpful for developing
Cameron Highland and attracting more tourists.

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1.5 Scope of Study

This study will focus on rivers in the Cameron Highlands, which are located in
Pahang, Selangor. Malaysian households were selected as respondents for our
survey. The total number of households chosen were 200 respondents. This
respondent took almost 4 weeks in July 2022 to do the survey.

1.6 Study Area

Figure 1.6 Rivers in Cameron Highlands map from Goole map

 
One of the biggest hill stations in Malaysia is the Cameron Highlands. It has a 712
km2 area, which is comparable to Singapore's size. The highest point in Malaysia
that can be reached by vehicle is located there at 5,000 feet (1,500 metres) above
sea level. The area of study that will be chosen for this study is the rivers in
Cameron Highland. This study represented all the rivers in Cameron Highland,

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 for example, Sungai Pauh, Sungai Terla, Sungai Bertam, Sungai Telam, and so
on. These rivers flow to Sungai Pahang and Sungai Perak, and most of the rivers
surround agriculture, industry, and houses.

1.7 Process of Study

Four stages have been divided for this framework as follows:

i) Stage 1
The researcher will discuss the purpose of the study, the study's background,
the problem statement, the research objectives, the research question, the
scope of the study, significance of study and study area.

ii) Stage 2
The researcher carried out data collection on the WTP of Malaysian
households to improve the quality of rivers in the Cameron Highlands. These
data were gathered from two sources which are primary data and secondary
data.
iii) Stage 3
The data collected through the survey questionnaire will be analyzed using the
SPSS Statistics 29.
iv) Stage 4
The conclusion and recommendations of the study were formed about the
willingness to pay to improve the quality of rivers in the Cameron Highlands.

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1.8 Organization of the report

There are five chapters in this study. In chapter 1, the researcher will explain the
introduction, define the issue statement, list the study's purpose and research question,
and explain the study's scope and study area. In chapter 2, the researcher will discuss the
ideas of willingness to pay, contingent valuation technique, economic value of
environmental resources, and a literature assessment of prior studies the study's scope and
methodology. In chapter 3, the researcher will discuss the ideas of willingness to pay,
CVM, economic value of environmental resources, and a literature assessment of prior
studies. In Chapter 4, outline the procedures that will be used in this research, including
questionnaire design, data collection, and data analysis using descriptive statistics and the
CVM with single-bounded dichotomous choice mode. In Chapter 5, we will examine an
empirical survey that explains household payment propensity. In the last part of this
study, the researcher will conclusion and recommendation.

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 CHAPTER 2

LITERATURE REVIEW

2.1 Introduction

This chapter focuses on the literature on respondents' willingness to pay. We will address
the associated themes of willingness to pay concept and method analysis, welfare
economics and welfare measurement, utility theory, theoretical techniques of valuation
methods, the CVM process, and an overview of a CVM case in this theoretical context.

2.2 Willingness to pay (WTP)

Awareness of environmental quality has trickled into popular culture in a sophisticated

industrial country. People are being compelled to make sacrifices and alter their lifestyles
in order to help solve the world’s environmental challenges because of rising
environmental awareness and a desire to actively contribute to social and environmental
well-being. (Hanemann, 1991) stated "willingness to pay" (WTP), which includes
compensatory (C) and equivalent (E) variations that correspond to the greatest amount a
person would pay, as the classic welfare assessment for price change. A person's
willingness to pay (WTP) is determined by the degree of quality (q), price (p), and utility
(u) that are provided for that particular level.

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The total value of the product is found by multiplying the average willingness to pay
(WTP) of the sample by the number of households in the relevant demographic. In
certain cases, this value is separated into use value and non-use value by comparing
respondents' WTPs to those who anticipate directly benefiting from the public good (for
example, gain from increased visibility or the rise in fish populations in a stream that has
been cleaned up) and to the respondents' WTPs of those who have no such expectations.
Sometimes, specific questions are asked to further divide the value of non-use into the
importance of keeping the possibility of future use, pure existence value, and bequest
value (V.Krutilla).

Figure 2.2: Classification framework for method to measure willingness to pay

Sources: (A review of methods for measuring willingness-to-pay, 2006)

On the most fundamental level, approaches may be classified according to whether they
use surveying techniques or are based on actual response data. When looking at reaction
data, market observations or data collected by doing experiments might be employed.
Experiments are further subdivided into field and laboratory experiments. We added
auctions as an additional technique in the categorization framework since they are a

12
highly significant kind of laboratory experiment. Price response results are often referred
to as "revealed preference data." There are direct and indirect surveys for obtaining
relevant data when using survey-based methodologies for estimating WTP. Respondents
in direct surveys are asked how much they are willing to pay for a product. In indirect
surveys, a rating or ranking method is used to build a preference structure that can be
used to figure out WTP. Methods for conducting indirect surveys include conjoint
analysis and discrete choice analysis. In fact, choosing a practical approach for assessing
WTP is often constrained by time or monetary restrictions. The method's duration and
costs are heavily influenced by data collection.

2.3 Welfare Economic and Welfare Measurement

2.3.1 Consumer surplus

When consumers pay less than they are willing to for a good and services, this is
described as a "consumer surplus." It evaluates the additional benefit consumers get
by paying less for an item than they were willing to. Figure 2.1 will be used to show
how the ideas of consumer surplus and welfare. 

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Figure 2.3: Consumer and Producer surplus
Sources: (Isser, 2018)

The economic concept of marginal utility, which describes the added pleasure a
consumer has when purchasing an additional unit of a good or service, serves as
the foundation for the concept of consumer surplus. Depending on a person's
tastes, a product or service's usefulness changes. As the supply of an item or
service rises, customers are often less motivated to buy more of it owing to the
diminishing marginal utility or additional value. When a client is willing to shell
out more money for a product than the going rate on the market, this is known as
a "consumer surplus." Manufacturers are ready to sell all of their available stock
at the price at which the market is in equilibrium. Complete surplus refers to the
total net advantage to consumers and producers through market trade. It indicates
the total of consumer and producer surpluses. In figure 2.3, Qe P e is the quantity at
equilibrium where supply and demand are equal.

2.3.2 Utility Theory

(Fishburn, 1968) describes utility theory as being concerned with people's actions
and choices on a practical level. It also talks about what people like and how they
judge attractiveness, worth, value, and goodness, as well as any other related
ideas. Utility theory focuses on the following hypotheses about consumer
behaviour: One assumption is that individuals can rank any number of alternatives
in a precise order of preference. There is no restriction on the number of
possibilities a customer may rate. The utility hypothesis helps explain why
customers act and make purchases the way they do. A related theory is the
expected utility theory. It asserts that customers make choices based on the
enjoyment they anticipate receiving from a certain activity, even when the result
is unclear.

The utility function is crucial due to its close relationship with the law of supply
and demand and its contribution to choice theory in explaining consumer

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behaviour. Increased demand frequently results in increased pricing, which
encourages enterprises to manufacture the product. As supply grows, prices often
decline. Cost, supply, and demand will eventually all converge on a point of
equilibrium as time passes. It is because of a thing's usefulness that the supply
curve, demand curve, and price curve for two similar goods might be completely
different from one another. It also explains why people are often prepared to pay a
premium price for things that come in limited quantities.If they provide sufficient
utility, the expenditure is justified. Scale of preference where the confumer prefer
the higher utility compare to the lower utilty:

U =f {x , y }

Therefore, the ordinal utility function is

U =f (q ¿ ¿ 1 , q2 )¿

2.3.3 Utility Maximization

Products are purchased by rational customers because they provide them with
some form of value. Consumers produce demand for commodities due to the
desirability of the commodities' functionality. The more customer happiness a
product provides, the greater its demand among consumers. So, to maximize their
level of satisfaction, the consumer will purchase both of q 1 and q 2 together.
Therefore, the consumer’s budget constraint is:

y= p1 q 1+ p2 q 2

where:

y = Income

p1 = price of product q 1

p2 = price of productq 2

2.3.4 Theory of Welfare Economic

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 An essential component of microeconomics is welfare economics, which
examines how economic decisions and resource distribution affect people's well-
being. It investigates how the economy is structured and the relationship between
markets, individuals, and society. It primarily focuses on how different economic
situations impact social wellbeing and how that impact changes. Marshall's
Consumer, which is more popular, recommends measuring economic wellbeing
by consumer surplus.

When both sides of the consumer choice issue have identical quantities required,
the Marshallian and Hicksian demand implications apply. Compared to
Marshallian demand curves, Hicksian demand curves assume real wealth to
remain constant in order to maintain utility constant, hence consumer wealth is
higher at prices beyond this equilibrium point. Only nominal wealth is maintained
in the Marshallian demand model. The converse is true for prices below this level:
Marshallian demand assumes that the consumer is better off as nominal wealth
stays the same, but price levels decline (negative inflation). The individual is
worse off because Hicksian demand believes that actual wealth is constant.
Marshallian demand curves represent both the rent impact and the substitution
effect, which is why they are more “stable”. Rent must be constant since utility is
constant; hence, Hicksian demand curves only depict substitution effects, which
implies that demand changes as prices rise only when alternative choices become
more alluring.

2.4 Economic Valuation of Environmental Resources

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 Figure 2.4: TEV Taxonomy and Ecosystem Services
Source: (Randall, 1991)

Environmental valuation techniques have been used to calculate the advantages and
disadvantages of using environmental assets, enhancing their quality, or repairing
ecological harm. They must take the situation's complexity into account. By calculating
people's willingness to pay to benefit from environmental assets, economists have
historically created instruments to quantify ecological values. Values in a hypothetical
market are determined by asking respondents how much they would be willing to pay for
the use and protection of an environmental asset. Finding out how much consumers are
willing to pay for changes in the quantity or quality of products or services in the
environment is the aim of contingent valuation. Figure 2.2 shows use value and non-use
value is the relationship between the TEV’s taxonomy. In general, use values are divided
into direct, option value, and indirect categories. The value is revealed when goods and
services are traded on the market, and their use values may be directly seen. Use values
that are "indirectly utilized" relate to the natural environment's function in providing life

17
support. Option values are a reflection of how much individuals value their capacity to
utilize the environment in the future and, therefore, the possible future advantages of
products and services. Given the prospect of future progress in knowledge pertinent to the
consequences of development, the quasi-option value reflects the readiness to forego an
irreversible commitment to development today.

Non-values are classified as either bequest or existence values. Existence values, which
benefit from knowing that goods and services exist and will continue to exist even if the
person doesn't use them or doesn't plan to use them, and bequest values, which benefit
from making sure that future generations get the same goods and services as the current
generation, are the two types of values.

2.5 Theoretical Method of Valuation Methods

Market-oriented and non-market-oriented valuation strategies may be used to classify

these methodologies. Market-oriented valuation approaches employ market prices, which
reflect values at the point of exchange, and are effective for estimating factor incomes,
damage costs, and replacement costs. They are dependent on the way that money is now
distributed. In a production function approach, prices can also be used to figure out the
indirect value of nature when it comes to making goods and services that have a market
value.

Non-market-based methods can be used to value ecosystem services that aren't traded on
markets. These methods fall into two groups known as "revealed preference methods"
and "asserted preference methods."

There are two categories of preference approaches: choice modelling and contingent
valuation methods. The travel cost approach, the hedonic pricing model, and the
advertising behavior method are three ways to categories revealed preferences.

2.5.1 Method of State Preference Method

2.5.1.1 Contingent valuation method (CVM)

In the contingent valuation method, respondents are asked questions

regarding how much they would be willing to pay (WTP) to ensure a

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 welfare gain from a change in the provision of a nonmarket environmental
good and how much they would be willing to accept (WTA) in exchange
for having to bear a welfare loss from a provision that is provided at a
lower level. So, one of the most important things to figure out before
putting the CVM into use is which of the two measures, WTP or WTA,
gives a more accurate picture of value in a given situation.

2.5.1.2 Choice Modeling

Environmental valuation methods based on “choice modelling” that

consider expressed preferences, such as the contingency valuation method,
might be thought of as alternatives to more well-known valuation
methodologies. Consumer theory is congruent with a variety of choice
modelling techniques, and its emphasis on an attribute-based theory of
value enables a better depiction of several environmental management
scenarios (Nick Hankley, 2001).

2.5.2 Revealed Preference Method

2.5.2.1 Hedonic Pricing Method

The hedonic pricing method (HPM), one of the traditional approaches to

evaluating the economic pricing of the environment, typically individuals
express their desire for the quality of the environment through their
settlement purchases. Therefore, while deciding to purchase a home, there
is a hidden cost in which the environmental quality is also assessed and
the amount of demand for the consumption and/or usage of non-market
goods and services, such as the presence or absence of air or noise
pollution, is indicated. HPM figures out the economic value of places from
an environmental point of view by using mathematical and statistical
methods (Garrod, 1992).

2.5.2.2 Travel Cost Method

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 The travel cost method is used to estimate the economic value of outdoor
leisure. There are significant consequences for consumer surplus when
choosing the functional form of demand, so this choice shouldn’t be taken
merely based on quality of fit. Since values are inferred from people’s
behavior, the technique has this benefit. The immense value of these
places is shown because people are willing to travel considerable distances
to see them. The price is approximated by the trip expense (Carr, 2003).

2.5.2.3 Averting Behavior Method

The averting behavior method protects against environmental or other

dangers, whether by decreasing exposure to hazards or neutralising the
consequences of exposure. These techniques assist in the utility-
maximizing, observable-behavior-based evaluation of the economic
benefits of public policy (Blomquist, 2004).

2.6 History of Contingent Valuation Method

The value estimations obtained from using stated preference (SP) data to calculate the
value of natural resources are conditional on the information previously supplied to the
respondent, this method of estimation is known as contingent valuation (CV). The idea of
economic value in CV comes from the traditional idea of welfare economics, which
focuses on maximizing the utility of each person.

In 1940s, (Bowen, 1943) and (Wantrup, 1947) were the first to suggest using a public
opinion poll as a suitable tool for valuing public goods, based on the idea that voting may
be the closest alternative for consumer choice. According to (Wantrup, 1947) describe
that the avoidance of soil erosion provides 'additional market advantages' that are public
goods in nature, one potential strategy for assessing these benefits is to poll people to
determine their willingness to pay for these benefits.

2.6.1 Format of CVM

2.6.1.1 Open-Ended Format

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The procedure calculates the consumer surplus for the environmental good
and the maximum value of the non-market product to the responder.
Typically, this is accomplished by asking people their willingness to pay
for the product and recording their response. This known as an open-ended
CV because the responder is not provided with a price to accept or reject.
Respondents often find it difficult to intuitively assign a value to a non-
market commodity without guidance. As a consequence, many open-
ended CV forms generate an unacceptable amount of protest zero replies
or non-responses to the WTP questions (Desvousges, 1983).

2.6.1.2 Payment Cards Format

The survey questionnaire may be created to contain an ordered list of

threshold values, referred to as a "payment card," rather than being
sequential. The next step is for the responder to simply go through the
range of values and mark the highest (lowest) price they are prepared to
pay (accept). The respondent's genuine "point" valuation is assumed to be
somewhere between the value in the circle and the next highest (lowest)
choice, much as with oral sequential bidding. Payment cards save time
because even a comprehensive set of criteria may be visually checked
quickly without the interviewer having to prompt. By using payment
cards, you can also avoid the high number of items that don't answer open-
ended valuation questions (Cameron, 1989).

2.6.1.3 Choice Single Bounded Format

(Chea, 2019) determined that each person making a decision has access to
imperfect knowledge about all the factors they believe are significant in
the decision-making process. For example, in these single-choice
questions, the respondents are given a bid amount ranging from RM5 to
RM20 at random, with the "Yes" answer serving as a dependent variable.

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 According to the circumstances and taking into account your present
income and costs, would you be prepared to pay RM3/4/5/6/7 per night as
a conservation levy?

2.6.1.4 Choice Multiple Bounded Format

In multiple-bounded discrete choice (MBDC) surveys, respondents choose

one of many answer choices, such as "certainly yes," "probably yes," "not
sure," "probably no," and "absolutely no," to indicate how confident they
would be to support a programme at various costs.

2.6.2 Phases in CVM Procedure

There are six stages of the practical application of CVM. These stages as
discussed below:

Stage I: Setting up the hypothetical market

The key goal here is to create a scenario that matches a real-world circumstance
as closely as possible. For the people being questioned, it is still often
hypothetical. The responses of the individuals being questioned for the CVM
survey will, for the most part, not directly influence a potential choice to execute
or not implement the environmental change to be appraised. establishes the
payment's purpose. With commodities from the conventional market, we must
pay to get more of the item. The indicated improvement is subject to actual
money being received. Respondent must comprehend this circumstance. must
create a purported bid vehicle or payment mechanism. This vehicle must meet
requirements for responder perceptions of fairness, realism, and incentive
compatibility. Property taxes, income taxes, utility bills, trust fund contributions,
and entrance fees are all possible payment methods for WTP bids. The way the
products are set up is determined by the information given to respondents about
every part of the hypothetical market and any information about the good being
evaluated. 

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Stage 2: Obtaining bids

The survey is carried out when the survey instrument has been set up. In order to
do the environmental evaluation, people are asked for their highest WTP. Person-
to-person interviews, mail questionnaires, telephone interviews, and personal
interviews are some of the methods by which interviews may be conducted.
Person-to-person interviews are where most research and research-related
recommendations originate. These have the benefits of face-to-face
communication, like making the interviewee more aware and involved, making it
less likely that something will be misunderstood, and letting you ask questions on
the spot. 

Stage 3: Estimating mean WTP

How much would respondents be willing to spend to see environmental changes

made? Following the collection of WTP bids, the median and average bids are
often presented. Extremely high or low bids have little impact on the median, and
median values are almost always lower than mean values. When the distribution
is skewed, you have to decide whether to use the mean or median bid value, since
the median and mean are often different in this case.

Stage 4: Estimating bid curves

When collecting results and determining the viability of the CVM exercise, it is
helpful to look at how WTP bids are determined. With the WTP amount as the
dependent variable and a variety of independent variables, a bid curve may be
estimated.

Based on the following function, a logit regression model was used to figure out
how likely "yes" answers were:

WTP( i)=f { {Y i , Ai , E i , M i , Si , X i , U i , e i , }

Where Y=income, A=age, E=education, M= marital status, S= family size, X=

additional background variables, U= usage of environmental and e = random
disturbance.

23
 Stage 5: Aggregating the data

To get the total of economic value, the mean of WTP must obtain the total
economic value. The derived bids and bid functions of the benefit transfer are
used to make this projected demand curve for the environmental product. 

Stage 6: Appraisal

In stage 6, To respond to the question, the CVM's appraisal of estimations was

technically accurate. This is due to the fact that some respondents evaluate them
more highly than the interviewer intended. The technical, user, institutional, and
financial aspects of a method are the four things that determine whether or not it
is acceptable.

2.7 Overview CVM case

(Kamri, 2013) has carried out a study on the environmental economics of Gunung Gading
National Park using a free-form contingent valuation survey was conducted with both
domestic and foreign visitors. This was done to see if people would be willing to pay to
keep it around. A random survey revealed that the average willingness to pay for better
environmental conservation was RM16.14 for foreign visitors per visit and RM7.38 for
local visitors per visit. Gender, level of education, and income all had a significant impact
on willingness to pay. This study showed that the contingent valuation method can be a
useful tool to direct decision-makers regarding policy objectives and natural resource
management in protected areas in developing countries.

According to (Muhammad Mehedi Masud, 2015) evaluates Malaysian farmers'

willingness to pay (WTP) for a proposed agricultural climate adaptation programme. The
value connected to addressing climate challenges in Malaysian agriculture was
determined using the contingent valuation method (CVM). The research showed that
WTP is influenced by numerous socioeconomic and motivational aspects. This report
outlines the actions that all institutions should take to better handle climate change.

24
Figure 2.7: Willingness to pay for ecosystem services

Sources: (Ren Y, 2020)

A society concerned with its residents' economic well-being should make changes in
environmental resource allocations only if the benefits of the change outweigh the costs
of draining funds and inputs from other uses in terms of individual wellbeing (A. Myrick
Freeman III, 2004). In order to enhance their environmental performance, Malaysia
Airlines' customers' willingness to pay for a carbon offset programme is assessed in the
study. The amount that air travelers would be willing to pay to offset the carbon
emissions caused by their flight is calculated using the double-bound dichotomous choice
of the contingent valuation method (CVM). According to the findings of this research, an
extra price of RM86.00 may be imposed on airline tickets to improve environmental
performance (Nur Fatihah Shaar, 2020).

Other than that, researcher by (Dr. Muhammad Hassam Shahid, 2021) aims to analysis
the factors that influence families' willingness to pay (WTP) for safe drinking water in
the impacted region. A contingent value survey strategy was used, as well as a stratified
random sample technique. The findings show that as the respondent's income rises, so
does his or her willingness to pay for clean water. While multiple regression finds a
monthly mean WTP of Rs. 234.54 that is heavily influenced by age, family income,
education, and environmental awareness, indicating that respondents with greater

25
household income and a higher degree of education are prepared to pay more for clean
water. Residents who live near the tanneries are more impacted and have a higher WTP.

To experimentally quantify tourists' WTP for ecotourism resources, we employed the

contingent valuation method (CVM) in two Peninsular Malaysia marine parks. Given
this, this study's objective is to apply environmental economic methods, with a special
emphasis on the contingent valuation approach of WTP, to the problem of estimating the
value of ecotourism resources. To assess how much tourists are willing to pay (WTP) to
keep marine parks protected, researchers use the Logit and Probit models. The studies
were performed between April and July of 2007 using data collected from a randomly
chosen sample of 215 respondents on Pulau Redang and 153 respondents on Pulau Payar.
Research conducted on Pulau Redang found that annual conservation spending from
domestic tourists was RM7.80, whereas spending from overseas visitors averaged
RM10.60. Comparatively, Pulau Payar's data show that domestic and international
visitors are willing to pay RM7.30 and RM8. The findings might serve as a roadmap for
marine parks and a springboard for management strategies that facilitate ecotourism's
contribution to the sustainable maintenance and expansion of marine parks in Malaysia
(Mohd Rusli Yacob, 2009). 

In study by (Rafia Afroz, 2009 ) is to determine how much people would be prepared to
pay to enhance Dhaka, Bangladesh's garbage collection system, they used the contingent
value approach. Our aim was to evaluate the degree to which door-to-door rubbish
collection affects WTP among respondents. One approach was to simply ask residents if
they would be willing to pay more for garbage collection in order to fund a new waste
management initiative. Although inhabitants of locations with access to garbage
collection services reported a higher mean WTP score, this difference was not
statistically significant. Dhaka city residents' WTP totaled 7.6 million Taka (USD0.1
million).

Other than that, (James A. Brox, 1996) in order to calculate the societal gains from better
water quality in the watershed, a large contingent value survey was conducted, and its
findings are presented here. Preliminary findings suggest a willingness to pay (WTP) of
up to $4.50 per family per month (19% of the typical water bill) for residential water

26
quality improvements, with a somewhat lower value placed on protecting the
environmental quality of parks in the watershed. This means there is a need in the area
for water quality initiatives with a capital value of almost $91.00 per family at a 5%
discount rate. The consistency between our estimates and those from other research, as
well as the relative smallness of the projected range of WTP values, imply that our
estimates provide a credible assessment of the monetary worth of social gains from water
quality improvements in the area.

2.8 Conclusion

The previous studies on willingness to pay and the theoretical research that will be used
in this study are explained in this chapter. The Malaysian case study needs to be talked
about in order to convince policymakers that environmental goods valuation is useful and
should be used when approving projects that could be especially bad for the environment.

CHAPTER 3

METHODOLOGY

27
3.1 Introduction

This chapter provides a description of the method that was used to acquire data about the
willingness of households in Malaysia to pay in order to enhance the water quality in
Cameron Highland. This part will go through the methodology of the CVM approach,
which began with the design of the research and continued with the data source and the
techniques of data analysis.

3.2 Research design

This study used questionnaire-based survey research. The researcher sent out a
questionnaire, and the chosen households from each state in Malaysia were asked to
respond. Because this is the most suitable strategy for measuring outcomes and obtaining
the solution to fulfil the objective of simplicity, the researcher conducts the study using
quantitative methods. An in-person interview would be preferable because it's crucial for
the respondent to comprehend the issue raised in the questionnaire. The main question of
this study is whether or not people are willing to help pay for fixing up the rivers in the
Cameron Highlands. 

3.3 Source of data

Both primary and secondary data, which may be divided into two groups, were utilized in
this research.

3.3.1 Primary Data

For this research, researchers will use different types of interviews as a way to get
the information and data they need. Farmers in Cameron Highland were
interviewed for the research. This interview can help researchers get valid and
reliable information to complete this study. The questionnaires have been
designed to achieve the objectives of this study, which are to identify the
demographics of a household, evaluate the willingness of Malaysian households
to pay to prevent river pollution, investigate the level of awareness among
Malaysian households regarding river preservation, and assess respondents'
satisfaction with river pollution in Cameron Highland.

28
 3.3.2 Secondary Data

To get more information in detail, the researchers used articles, pamphlets,

previous related research, journals, magazines, and newspapers through the
literature review process.

3.4 Questionnaire design

The primary data used to gather quantitative primary data is obtained via a questionnaire.
Quantitative data may be collected consistently using a questionnaire, resulting in
findings that are internally consistent and suitable for analysis. How the findings will be
used must be made clear from the start, and each questionnaire must have a defined
objective that is related to the research objectives (S Roopa, 2012). In this study the
questionnaire divided into section A, section B, section C and section D.

In section A, questions 1 through 7 are about the general demographics, such as gender,
age, race, highest education, occupation, marital status, monthly household income,
family size, and origin. Section B discusses household awareness of river pollution in the
Cameron Highlands. The question is from 10 to 15, which focuses more on the condition
of the Cameron Highland rivers in recent days.

The goal of this study is addressed in Section C. The creation of a hypothetical market for
the river's condition is the first action taken in this part. In order for the responder to
understand what they are paying for to improve the quality of rivers. The hypothetical
market is described in the questionnaire that follows:

29
The vast area known as the Cameron Highlands is blessed with many rivers and bodies of
water. Unfortunately, pollution has permanently damaged several of its waterways. Sungai
Tringkap, Sungai Icat, and Sungai Parang are three rivers in the Cameron Highlands that
have been deemed biologically dead and are thus unusable for any productive activity,
including irrigation. A sudden spike in water level was caused in October 2013 by flash
floods in the Ringlet reservoir's catchment area combined with preexisting siltation.
Unfortunately, even the carefully timed release of water caused 100 homes in the
community of Kg Bertam Valley on the Sundai Bertam downstream of the dam to flood,
resulting in the deaths of four people. There are a lot of relevant elements. These include an
unusually quick increase in water levels caused by deforestation, more intensive farming
operations, and improper waste management techniques, mostly due to visitors and
residents. Among the goods discovered on riverbanks are things like vegetable and fruit
fragments that bacteria may decompose, as well as paper, plastic, glass, wood, metals,
rubber, and leather.

The government has created a solution called Smart Sungai to fix the issue. Drones will
assist with this process by making frequent excursions to hot spots that Smart Sungai has
identified, and autonomous and remote-controlled clean-up boats may clear rivers as soon
as they get a notice from Smart Sungai. Depending on where it is used, IoT for monitoring
water quality or odor might cost RM100,000 or more per site. In the meantime, the price of
a drone includes not just the hardware but also any peripherals, monitoring systems,
software, analytics, and maintenance.

The government and each household should also take up some of the responsibilities. To
improve the quality of the Cameron Highland rivers, the government needs funds to install
"Smart Sungai" for monitoring the river. To improve the quality of rivers in Cameron
Highlands, the government planned to add RM5 to each household's water bill.

30
The question 16 for follow statement is:
“In order to improve the river pollution, are you willing to pay additional price for
upgrading the facilities and technologies for river monitoring? “

( ) Very Willing to pay,

( ) Not willing to pay,

The previous question was designed to provide the respondent with both the actual
situation and a hypothetical alternative. If they responded "yes" to question number 16,
then they are aware that the money they are contributing is being used to enhance the
river ecosystems in Cameron Highland. The question is structured as a discrete choice;
therefore, the only possible answers are "yes" or "no". There is different amount given to
different randomly which are RM5, RM10, RM15 and RM20.

The payment vehicle is an essential component of any CVM study since it provides the
environment for payment. Similar to other features of a CVM scenario, the payment
mechanism influences how respondents reply to the elicitation inquiry. When payment is
due and how it is collected might influence respondents' preferences (M.D. Morrison,
2000). The payment vehicle that used in this study is water bill, its easy way for the
Malaysia household to contribute their parts for improved river pollution.

The attempted to document the reasons why the respondent was willing to pay the
proposed bid if they answered "Yes" to either of the first two offers and why they were
unwilling to pay if they answered "No" to both offers. Listed below are some reasons
why some individuals are unwilling to pay at all:

1. Natural Environment protection is government responsibility

2. We pay through taxation
3. Current water bill is already sufficient
4. I’m not interested
5. Other (Please specify)

31
The reason for willing to pay:

1. Agree with plan “Smart Sungai”

2. For the next generation
3. For society as a whole
4. Other (Please specify)

Section D contains suggestions on how to improve the river quality in the Cameron
Highlands. In light of this specific, the researcher requires the respondent's opinion.

3.5 Data analysis

The contingent valuation technique (CVM) and descriptive statistics are used in the data
analysis to determine household willingness to pay.

3.5.1 Descriptive Statistics

Descriptive statistics are any numerical processes or graphical approaches that are
used to organize and explain the features or elements of a particular sample.
Descriptive statistics may also be referred to as "descriptive data." The goal of
descriptive statistics is to describe the middle point of a range of scores, also
called the measure of central tendency, as well as the range of scores, also called
the dispersion or variance (MJ Fisher, 2009). 

3.5.2 Contingent Valuation Method

The CV approach, which asks respondents how much they would be prepared to
pay for a hypothetical new circumstance in comparison to an existing one, is the
most popular way to evaluate the value of TEV. The CV technique generates
values for both usage and non-use. The benefit of CV is that it lets you figure out
the Hicksian demand, equivalent surplus, and compensating surplus right from the
survey results, without having to make a broad assumption about the utility or
demand function. The idea of CVM is to create a hypothetical market for
improved Cameron Highland rivers then ask respondent what they would be
willingness to pay.

32
3.5.3 Discrete Choice Single Bounded Format

The discrete choice single format for WTP was used in this study using a standard
approach. Dependent variables in this study are willing to pay and not willing to
pay, code 1 if the respondent answered “YES” AND 0 if the respondent answered
“NO”. For independent variables include in the value card is gender, age, race,
highest education, occupation, marital status, monthly household income, family
size, and origin. Five values are used on the car RM5, RM10, RM15 and RM20.

To determine the household's willingness to pay to improve river quality,

responses were regressed on social and economic characteristics. The logit
regression model was specified as follows:

1
y= −( β 0+ β 1 x )
¿
1+exp ¿

where,

Y= Response of household, gender, age, race, highest education, occupation,

marital status, monthly household income, family size,; and the maximum amount
of willingness to pay, which was either "1" if Yes or "0" if No.

β 1= coefficient estimate on the bid amount

β 0= intercept which is constant

x=¿ set of independent variables

To model outcome variables that are dichotomous or binary, use probit

regression. The probit model combines predictors in a linear fashion to simulate
the probability's inverse standard normal distribution.

❑ −1
ni =Probit ( p i) =∅ pi

where,

33
 ni

∅ =∫
( ni )

∞
1
√2 π
exp (
−1 2
2
u du)
Or

(∑ )
k
Bk xik
p =∅
i
k=1

Where pi= likelihood of accepting the offer amount

Bk =coefficients to be estimate

x ik =factor influencing the probability including the bid amount

The following is a list of the variables we used in our study:

WTP = If the respondent is willing to pay the amount requested, the dependent variable is
set to 1, otherwise it is set to 0.

LBD = Bid amount that offered to respondent: RM5, RM10, RM15, RM20

AGE = age range of the respondent, where 1= <20, 2= 21-29, 3= 30-39, 4= 40-49, 5= 50-
59, 6 = >60

GEN = 1if male, 0 if female

EDU = 1 education level obtained primary education, secondary education, collage,

University, 0 otherwise

OCU = 1 if employment, 0 otherwise

MARIT = 1if married, 0 if single

INCOME = income range of the respondent, where 1=<RM1999,2= RM2000 - RM3999,

3=RM4000 - RM5999,4= RM6000 - RM7999, 5=>RM8000

FMLY = 1 if family size more than 3, 0 if otherwise

COND = the condition of river based on respondent opinion where 1= very clean, 0 if
otherwise

34
3.6 Conclusion

The procedure for data analysis used in this study is described in this chapter. The
analysis of the findings will be guided by the hypothesis mentioned in Chapter 1. By
analyzing the study's results, the researcher will be able to find out the demographics of
household WTP, how much Malaysian households are willing to pay to stop river
pollution, how aware Malaysian households are of the need to protect rivers, and how
satisfied respondents are with river pollution in Cameron Highland.

35
 Chapter 4

Research Finding

4.1 Introduction

The chapter focuses on the statistical results for respondent background and the
descriptive results of the survey. The condition based on the respondent's opinion is
followed by the level of agreement with the given statement, willingness to pay (yes/no),
and CVM result. Finally, we selected respondent suggestions for additional ways to
improve river quality. 

4.2 Profile of Malaysia household

For the purpose of the data analysis, a total of 200 questionnaires were used. In this
section of the questionnaire, the respondent will be questioned on their gender, age, race,
highest level of education obtained, occupation, marital status, monthly household
income, and family size as in table 4.1. The state with the largest number of respondents
is Selangor with 11.5 percent, followed by Pulau Pinang with 10.5 percent, and Negeri
Sembilan with 10.0 percent. From 200 responses, 48.5 percent are men and 51.2 percent
are women. According to the findings of this survey, 6.85 percent of respondents had a
high level of education. Only 14.0 percent of respondents have completed primary
school, while 17.5 percent have completed secondary school. In terms of occupation, 60.0
percent of respondents are employed, 23.5 percent are unemployed or retired, and 16.5
percent are students. Aside from that, 46 percent of people are single, while 54 percent
are married. 

Table 4.1: Demographic Characteristics of respondent

Percentage
Variable Number of respondents
(%)
Gender: Male       96   48.5
  Female       104   51.5
Age: <20       24   12.0
  21-29     51   25.5
  30-39     42   21.0

36
   40-49     42   21.0
  50-59     27   13.5
  >60       14   7.0

Table 4.1 (Continued)

Number of Percentage
Variable
respondents (%)
Highest Education: Primary education   28   14.0
Secondary
  35 17.5
education    
  College/Polytech   46   23.5
    University   91   45.0
Occupation: Student     33   16.5
  Self employed   35   17.5
  Private sector   12   6.0
  Government sector   73   36.5
  Unemployed   20   10.0
  Retired     13   6.5
    Housewife   14   7.0
Marital status: Single     92   46.0
    Married     108   54.0
Income: <RM1999     28   12.4
  RM2000-RM3999     42   23.0
  RM4000-RM5999     71   35.0
  RM6000-RM7999     45   21.2
  >RM8000     14   8.4
Family size: 1-3     55   27.5
  4-6     124   62.0
    >7     21   10.5
Origin: Sabah       9   4.5
  Sarawak     13   6.5
  Johor     26   13.0
  Pahang     19   9.5
  Selangor     23   11.5
  Terengganu     19   9.5
  Negeri Sembilan     20   10.0
  Pulau Pinang     21   10.5
  Melaka     12   6.0
  Perak     14   7.0
  Kelantan     14   7.0

37
   Kedah     7   3.5
  Kuala Lumpur     3   1.5

According to figure 4.2 below, 29.6 percent of respondents are in the age range of 21 to
29 years old. The proportion of respondents over 60 is lower.

Figure 4.2: Age group distribution between gender

Table 4.3: Income group distribution between age

INCOME
2000- 4000- 6000-
<1999 >8000
AGE 3999 5999 7999
<20 4 5 9 5 1
21-29 9 11 15 12 4
30-39 5 9 14 12 2
40-49 1 7 18 12 4
50-59 3 6 11 4 3
>60 6 4 4 0 0

38
According to Table 4.3 above, the largest frequency of respondents is between the ages of
21 and 29, with the highest respondents having a range of RM4,000 to RM5,999. The
lowest response age is above 60, and the majority of them are retired or housewives.
Second lowest are 20 year old, the majority of whom are students according to the
questionnaire's requirement that they report their parents' income instead.

4.3 Rivers in Cameron Highland

This section covers the household awareness toward rivers in Cameron Highland which
including the frequency with which they visit, the kind of activities they like doing there,
the cleanliness of the river, and the main causes of river pollution.

Table 4.3a: Respondent activities in Cameron Highland

Number of Percentage
Variable
respondents (%)

Number of
32 16.0
visits: Once
  Second time 77 38.5
  Third time 55 27.5
  More than 3 times 30 15.0
  Never 6 3.0
Activities: Play around 17 8.5
  Watching wildlife 38 19.0
  Picnic 61 30.5
  Relaxing 84 42.0

From table 4.3 above, we see that the majority of respondents (38.5 percent) visit the
Cameron Highland rivers for the second time. The number of respondents who visit the
river for the third time is 27.5 percent. The respondent was asked to choose three main
activities that she/he enjoys doing at the chosen location in the research questionnaire.
With a high recorded percentage of 42 percent, the majority of respondents chose the
location as relaxing. This is because the place is full of natural resources and is a suitable
place for relaxation.

39
Table 4.3b: Condition of river

Number of
Percentag
Variable respondent
e
s

Extremely polluted 94 47.0

Very polluted 41 20.5
Polluted 24 12.0
Condition of river:
Neutral 32 16.0
Clean 9 4.5
Very clean 0 0.0
Newspaper 34 17.0
See with own eyes 157 78.5
Source of Internet 119 59.5
information: Television/ Radio/ Newspaper 48 24.0
Friends/ Family 40 20.0
Article 2 1.0
Dumping of trash from villages and
61 30.5
tourism
Factory waste 8 4.0
Main source
Excessive usage of fertilizers 42 21.0
Landslides and soil erosion due to
89 44.5
excessive

According to table 4.4, the highest number of respondents rate which is 47.0 percent
stated that the condition of the river as "extremely polluted". Only (4.5 percent) rate the
river condition is lean and most of them never visits the river before. For source of
information, we give the respondent to choose 2 options, the majority (78.5 percent) of
the sources of information about river pollution are "see with your own eye," which is a
valid point statement for this research. The internet ranks second with 59.5 percent, as it
provides a quick update about the world in this technological age. In the questionnaire,
the researcher gives few sources of river pollution, highest respondent with (44.5 percent)
choose landslide as the main source.

40
4.4 Level of satisfaction on condition of rivers in Cameron Highland

The level of satisfaction of each respondent is shown in table 4.4 above. In this research,
there are five levels, which are strongly disagree, disagree, neutral, agree, and strongly
agree.

Table 4.4: Respondent’s level of agreement on statement of rivers

A majority of respondents (57.0 percent) strongly disagree with the statement that the
river seems clean and fresh. This is because the river was extremely polluted and
destroyed the beauty of the place. Only 0.5 percent agree with the statement given in the
questionnaire. The second statement is that chemicals in water stimulate algae growth.
Algae cover ponds and lakes with a thick coating. Bacteria in the water feed on algae,
reducing oxygen levels and harming aquatic life, which was highly agreed upon by

41
respondents (48.0 percent). Other than that, polluted waters contribute to the spread of
illnesses affecting human health, such as typhoid, diarrhea, dysentery, hepatitis A, and so
on. The largest number of respondents, which is 53.0 percent, agreed with the statement
that river pollution would affect human health. Only 20.0 percent of respondents chose
neutral as their point of view.

According to the table below, the majority of respondents (47.0 percent) agree that rivers
in the Cameron Highlands will have an impact on our country's GDP, while only 3.5
percent disagree. 41.0% strongly agree that healthy ecosystems rely on an interconnected
network of animals, plants, microbes, and fungi. Any of these creatures may harm entire
aquatic ecosystems. Last, the facts: based on the facts, we have a responsibility to protect
the rivers together, and 48.5 percent agree with the statement.

4.5 Household Willingness to Pay (WTP) for improve the quality of rivers

A demand curve is made up of points that represent willingness to pay. As shown in table
4.5 below, when the bid price is RM20, only 15 of respondents are prepared to pay,
compared to RM5 for the lower bid price. In contrast, more bids that are "No" are placed
at higher bid prices (RM 20 = 38 respondent) than at lower bid prices RM 5.

Table 4.5 a: Yes/No to Card Value

WTP
YES NO Total
Card 5.00 67 5 72
Valu 10.00 47 7 54
e 15.00 10 11 21
20.00 15 38 53
Total 139 61 200

Table 4.5b: Chi-Square test

Asymptotic Significance
Value df (2-sided)
Pearson Chi-Square 73.862
a 3 0.000
Likelihood Ratio 75.829 3 0.000
Linear-by-Linear 68.890 1 0.000
Association
N of Valid Cases 200

42
The fact that the Pearson chi-square associated with cross-tabulation has a value of
73.862 indicates that it is highly significant, which suggests that the respondent's answer
(yes or no) and the card value are not independent, nor are they completely random, nor
are they distributed evenly among the card values.

4.6 Result of Contingent Valuation Study

Our research used the single-bounded dichotomous choice model for the contingent
valuation method. We look to WTP to improve the rivers in the Cameron Highlands.
According to table 4.1, 200 respondents from 13 different states in Malaysia responded to
each WTP.

WTP=a+ β 1 LBD + β 2 AGE+ β3 GEN + β 4 EDU + β5 MARIT + β6 INCOME+ FM + β 7 COND

WTP = If the respondent is willing to pay the amount requested, the dependent variable is
set to 1, otherwise it is set to 0.

LBD = log bid amount that offered to respondent: RM5, RM10, RM15, RM20

AGE = age range of the respondent, where 1= <20, 2= 21-29, 3= 30-39, 4= 40-49, 5= 50-
59, 6 = >60

GEN = 1if male, 0 if female

EDU = 1 education level obtained primary education, secondary education, collage,

University, 0 otherwise

OCU = 1 if employment, 0 otherwise

MARIT = 1if married, 0 if single

INCOME = income range of the respondent, where 1=<RM1999,2= RM2000 - RM3999,

3=RM4000 - RM5999,4= RM6000 - RM7999, 5=>RM8000

FMLY = 1 if family size more than 1, 0 if otherwise

43
COND = the condition of river based on respondent opinion where 1= very clean, 0 if
otherwise

In our study, the researcher thought that WTP would be linked to EDU, OCU, MARIT,
and INCOME in a positive way. As for income, a household is more likely to say yes to
willingness to pay if their salary is high. Foe example in study by (B.Barbier, 2017) show
that empirical findings from CVM research in Brazil indicate that the positive income
elasticity of WTP for environmental products and services is much below one. This
empirical finding implies that the theory of contingent values is inadequate. As a
hypothesis, we would predict that a higher education level will result in a greater
readiness to spend. Numerous studies have found that higher levels of education can
promote pro-environmental behaviour and increase individual WTP (Meyer, 2015).

4.6.1 Willingness to pay of household

Table 4.6 shows the findings of our research using the single-bounded approach.
For both the logit and probit which is the final modal of the household respondent
Pseudo R2. The variables included in the final model that are significant at 10%
level are INCOME and CON. Aside from that, AGE, OCU, MARIT, GEN and
FMLY are all significant at 5%. EDU and LBD are significant at 1%.

MARIT, INCOME, AGE and EDU have a positive sign because respondent
believe that education, marriage and income is one of major factor that impact the
WTP to improve the quality of rivers when respondent’s incomes are greater and
more likely to be paid. GEN, OCU and FMLY have negative sign. The coefficient
of LBD is strongly negative, as would be predicted. It is calculated that the mean
WTP is 6.40 RM. When this is multiplied by the entire number of people who
responded to the survey, an estimate of the total WTP for the pollutant may be
derived.

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 Table 4.6: Logit and Probit Estimation

Logit Probit
Variables
Coeff. t-statistic P-value Coeff. t-statistic P-value
Constant 7.5769 1.58 0.162 4.4528 1.62 0.158
LBD -1.5427 -3.48 0.000* -0.2053 -3.75 0.0008
GEN -0.5864 -2.61 0.015** -0.4125 -2.64 0.014**
AGE 0.2563 4.32 0.015** 0.1253 4.52 0.014**
EDU 2.3611 2.11 0.000* 0.5279 2.56 0.000*
OCU -0.7059 -1.69 0.050** -0.3143 -1.72 0.049**
MARIT 1.1552 1.63 0.050** 0.9522 1.69 0.061**
INCOME 1.0527 4.11 0.091*** 0.5521 4.61 0.099***
FMLY -1.9569 -2.67 0.012** -1.7268 -2.77 0.014**
CON 1.2254 3.23 0.023*** 0.9413 2.36 0.020**
‫ܴ ݋݀ݑ݀ ݁ݏݑ‬ଶ
ܲ 0.5742 0.5792
Chi Squared 65.74 68.18
Note: *Significant at 0.01 level, **Significant at 0.05 level and ***Significant at 0.1 level

4.7 Reason for Willingness to Pay

Table 4.7: Reason for willingness to pay

Number of
Reason Percentage
respondant
Agree with the government plan 64 46.0%
For next generation 44 31.7%
To society as whole 30 21.6%
Others 1 0.7%

Those who agree to contribute and pay to improve the quality of water should tell us why
they are willing to do so. The majority supports the government's "Smart Sungai" plans.
The second higher percentage 31.7 percent which is it will be benefit for next generation.
Third, to society as a whole, 21.6 percent which the respondent thinks that if the quality
of rivers improved, it would be helpful for society. We included an additional option in

45
the questionnaire, "other," so that respondents could include their own reason. The 1
percent reason was to save natural resources.

4.8 Reason for Not Willing to Pay

Table 4.8: Reason for not willing to pay

Reason Number of Percentage

respondant
Natural envoirement protection is
24 39.3%
government responsibilty
We pay though taxation 9 14.8%
Current water bill is already suffi cent 21 34.4%
I'm not interest 7 11.5%
 
Table 4.8 shows that 61 respondents were not willing to pay for the "Smart Sungai Plan."
Natural environment protection is government responsibility, which was the choice of
39.3 percent of respondents. Second, in my opinion, 34.4 percent of the current water bill
is already adequate. In addition, we pay through taxation, which is 14.8 percent. A small
number of respondents were not interested in the government's plan.

4.9 Respondent’s view about the questionnaire

At the end of the interview, we asked the respondents how they felt about our
questionnaire on three particular dimensions, as indicated in Table 4.9: if there was too
much information, the proper amount of information provided, or not enough
information. Multiple response analysis is the term for this, and the questionnaire is
designed to be simple to answer for the respondents so that the objective may be met.

Table 4.9 Respondent view’s

Number of
Respondent's view Percentage
respondents
Do you find this:      
  Too much information 13 6.5%
  Right amount information 182 91.0%

46
     Not enough information 5 2.5%

4.10 Respondent suggestion for improve the rivers quality in Cameron Highlands

In the area of the questionnaire that dealt with ideas, we also included a question
concerning ways in which the river may be improved in other ways. A total of 54
respondents took the survey and provided us with their feedback. These are noted as
significant factors, and a content analysis is carried out to ascertain the kinds of phrases
that appear often in their recommendations.

The most popular suggestion was to increase the fine for those who pollute the
environment. Second, as a Malaysian citizen, I believe that if everyone stops blending in
with the trend of the society these days and opens their eyes to what's actually going on
around them (minus the publicity and attention cravings), we can easily install a good
ideology towards the quality of literally every problem we have with a yield of effective
results. Last but not least, teach young children in school about the importance of keeping
the environment clean. Make it a mandatory learning subject so the children can grow
into responsible adults in the future.

4.11 Summary of CVM result

In this section, we utilized two models, namely logit and probit regression, for the CVM
that had a single-bounded dichotomous option. These models demonstrate that factors
such as married status, income, age, and education level all have positive indicators for
willingness to pay. The mean value of the WTP sample is RM6.40.

47
 CHAPTER 5

CONCLUSION AND RECOMMENDATION

5.1 Conclusion

This study attempts to identify the willingness of households to pay to improve the
quality of the river in Cameron Highland. To achieve the objective of this research, we
chose two types of data, known as primary data and secondary data. As in primary data,
we get all the information, such as the current river condition, the factors affecting the
willingness to pay of a household, and so on. Then we create a survey to get more
information about Malaysian households and their willingness to pay (yes or no). A total
200 suitable respondents were collected for this study.

The first objective is to identify the demographics of a household, as in table from 200
responses, 48.5 percent are men and 51.2 percent are women. According to the findings
of this survey, 6.85 percent of respondents had a high level of education. Only 14.0
percent of respondents have completed primary school, while 17.5 percent have
completed secondary school. In terms of occupation, 60.0 percent of respondents are
employed, 23.5 percent are unemployed or retired, and 16.5 percent are students. Aside
from that, 46 percent of people are single, while 54 percent are married. The largest
frequency of respondents is between the ages of 21 and 29, with the highest respondents
having a range of RM4,000 to RM5,999. The lowest response age is above 60, and the
majority of them are retired or housewives.

The second objective is to evaluate the willingness of Malaysian households to pay to

prevent river pollution. So for this, we choose CVM with single bounded dichotomous
choose as the method for measuring WTP. In order for the responder to understand what
they are paying for to improve the quality of rivers. The hypothetical market is described

48
in the questionnaire. Two models were used namely logit and probit regression. These
models demonstrate that factors such as married status, income, age, and education level
all have positive indicators for willingness to pay. The mean value of the WTP sample is
RM6.40.

Third objective is to investigate the level of awareness among Malaysian households

regarding river preservation. The highest number of respondents rate which is 47.0
percent stated that the condition of the river as "extremely polluted". Only (4.5 percent)
rate the river condition is lean and most of them never visits the river before. For source
of information, we give the respondent to choose 2 options, the majority (78.5 percent) of
the sources of information about river pollution are "see with your own eye," which is a
valid point statement for this research. The internet ranks second with 59.5 percent, as it
provides a quick update about the world in this technological age.

Last objective of this study is to assess respondents' satisfaction with river pollution in
Cameron Highland. Six statements of rivers in Cameron Highland. Majority disagree
with the statement of the river look so clean and fresh. The second is that chemicals in the
water cause algae to grow. A thick layer of algae covers ponds and lakes. Bacteria in the
water eat algae, which lowers oxygen levels and hurts aquatic life. This was a point on
which most respondents agreed. Aside from that, dirty water helps spread diseases that
hurt people's health, like typhoid, diarrhea, dysentery, hepatitis A, and so on. 53.0 percent
of those who answered agreed with the statement that river pollution would hurt people's
health. Major respondents agree that rivers in the Cameron Highlands will have an effect
on the GDP of our country and most of respondent strongly agree that a network of
animals, plants, microbes, and fungi is important for a healthy ecosystem. Any one of
these animals could hurt the whole aquatic ecosystem.

49
5.2 Recommendation

As a Malaysian citizen, responsibility is important to me because of our mother nature.

Industrial, household, and agricultural waste should all be disposed of properly. The
JPSPN and the Solid Waste and Public Cleansing Management Corporation are the two
main groups in Malaysia that are in charge of putting policies and rules for solid waste
management in place and making sure they are followed (SWCorp). Both are run
according to the Solid Waste and Public Cleaning Management Act 2007 and are part of
the Ministry of Housing and Local Government (abbreviated as KPKT in Malay) (Act
672). The second recommendation is that collaboration between the government and the
private sector is important. Malaysia is a developing country, and tourism contributes the
most to the growth of our country's GDP. Final recommendation is that Cameron
Highland's management launch more campaigns to alert farmers, homeowners, and
industrialists to the seriousness of river pollution. One step toward achieving sustainable
waste management is raising awareness about the importance of separating waste at
home. This could be achieved by introducing the topic into formal education and
mandating training and certification for collectors and contractors in the waste
management sectors. Also, several strategies might be used to affect cultural change,
such as targeting religious contexts, holding small meetings, etc. Media, clear labelling
on bought items, and offering assistance on collection and recycling at the home level
may be used to reach informed people.

50
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