Research proposal
2.1 Concept of Environmental Amenities
In environmental economics, an amenity is something considered to benefit a property and thereby increase its value (Carmichael, 2003). Carmichael classifies amenities in two; tangible and intangible amenity. Tangible amenities can include the number and nature of guest rooms and the provision of facilities such as elevators (lifts), Wi-Fi, restaurants, parks, communal areas, swimming pools, golf courses, health club facilities, party rooms, theatre or media rooms, bike paths or garages, while intangible amenities can include aspects such as well-integrated public transport, pleasant views, nearby activities and a low crime rate.
According to (Barry and Martha, 2017) environmental amenities are “facilities available to households within and around their houses. They ·are· consumed directly or indirectly by households on daily basis”. The presence of these facilities adds to the comfort, joy and general welfare of the households. He argued further that among these facilities are “open spaces within housing units, habitable rooms, the size of the dwelling unit, the average size of rooms, the number of rooms with cross ventilation, number of toilets available to households, the distribution of bathrooms and kitchen among households”.
2.1.1 Various environmental amenities that attracts tenants
Environmental sanitation; The WHO Expert committee on environmental sanitation defined in 1950 environmental sanitation as “the control of all those factors in man’s physical environment, which exercise or may exercise a deleterious effect on his physical development, health and survival” (Dwivedi& Sharma, 2007). Environmental sanitation includes disposal and treatment of human excreta, solid waste and wastewater, control of disease vectors, and provision of washing facilities for personal and domestic hygiene. Sanitation is critical of the human stay. Place with proper water and sanitation always people to stay in them and therefore when there is poor sanitation such areas need Urgent action to improve water, sanitation and hygiene as well as health care waste management and environmental cleaning in health care facilities. The WHO/UNICEF Joint Monitoring Programme 2019 Global Baseline Report found that one in four health care facilities globally lacked basic water services, and one in eight had no sanitation service (Mmom et al.,2011).
Sanitation facilities; Rapid urbanization, complex land tenure laws, and frequent natural disasters (that are likely to be heighted by climate change) are clear regional trends that directly affect informal settlements. Each of these factors complicates and increases the expense of delivering basic public services. The area with proper sanitation facilities tends to attract a large population to settle into them.
Provision of clean water is imperative in the improvement of the general welfare of the people in the area. Population growth in cities is driving this demand, but economic growth will add to it. More industry requires more water, and prosperity raises expectations for the quality of water services. A projected increase in the size of the middle class might lead to a demand for better governance and better services including more water services (World Bank, 2012). And water use outside cities, for agriculture and power, will grow even faster, putting more pressure on dwindling water resources. When these pressures are combined, it is projected that over the next 25 years the demand for water in Africa will almost quadruple a much faster rate than any other region in the world (2030 Water Resources Group, 2009). In Uganda 8 million Ugandans lack access to safe water and 27 million do not have access to improved sanitation facilities. Further, due to disparities in water access in Uganda, urban people living in poverty pay as much as 22 percent of their income to access water from water vendors. Water shortage in Uganda has also forced many tenants to choose places of residence basing on water availability (Moe et al., 2006). Unsafe water, inadequate sanitation, and insufficient hygiene practices account for an estimated 9.1 percent of the global burden of disease and 6.3 percent of all deaths, according to the World Health Organization (WHO) (Prüss-Üstün et al.,2008).This situation has been made acute with rapid urbanization especially in developing countries in Africa, global statistics have highlighted the alarming rate of urbanization in developing countries where there the urban population is expected to double from 2000 to 2030(UNFPA,2007).
Presence of electricity supply in so crucial in determining the accommodation pattern of the people. Energy is one of the main inputs to the production process and therefore, its development is crucial for developing economies aiming to boost their economic growth and private investment. This sector’s activities relate to and strengthen the rest of the economy as energy forms an input for almost all production processes of goods and services. Electricity is one of the important components of the energy sector as it is the most versatile and easily controlled form of energy (IMF, 2017). It contributes to economic growth, creation of jobs and provision of light for people in their homes. The Government of Uganda has for the past decade embarked on a Power sub-sector Reform Programme, which has resulted in the implementation of significant structural changes within the sector. The Reform Programme was aimed at transforming the electricity sector into a financially viable industry that would enable increased supply of adequate, reliable, and least-cost power to meet the country’s demand (Karekezi et al. 2004).
Presence of health facilities as one of the main components of a quality life it therefore determines the accommodation pattern of the people. Majority of the people especially low income the health care for the family takes a lot of their income therefore availability of health services is one of the fundamental key fundamental issues that they take into consideration before they decide a place for their accommodation. At the beginning of the 21st century, the government of Uganda began implementing a series of health care reforms that were aimed at improving the poor health indicators prevailing at the time. A sector wide approach was introduced in 2001 to consolidate health financing. Another demand side reform introduced in the same year was the abolition of user fees at public health facilities, which triggered a surge in outpatient attendances across the country. Accessibility and quality of health facilities; Poor health has stand out among other likely candidate for the disappointing growth performance of poor countries. Even though life expectancy increased in developing countries for the past 60 years, many people in low income countries encounter bad health conditions and this affects them economically also to a large extent . it is also difficult for people to stay in some places where the health facilities are in accessible (The Economist Intelligent unit, 2011).
Pacione (1984) evaluated the relationship between residential property value and residential environmental quality such as appearance of the residential area, air quality, area of trees and greenery nearby while Garrod and Willis (1992a) examined the impact of landscape characteristics on house price such as views of woodland, urban area, and open water area. Boyle and Kiel (2001) studied the impact of land uses, air and water quality on residential property value. Jim and Chen (2006) investigated the environmental attributes related to house price such as view of green spaces and proximity to wood and water bodies (Jim and Chen, 2007; 2009).
Transportation facilities influences the settlement of people in an area. When the provision of adequate transport infrastructure is pivotal to achieving sustainable development and socio-economic growth in Africa, as it facilitates the movement of goods and services, stimulates economic activities, improves the continent’s competitiveness, and provides access to social services. The level of transport infrastructure provision in Africa is inadequate, both in terms of quantity and quality with variation from one country to another. This has negatively impacted the continent’s efforts to achieve the desired levels of socio-economic growth, and has adversely affected efforts to foster regional integration and ensure social inclusiveness. Nonetheless, the continent has witnessed progress in several areas of transport infrastructure development over the last decade including increased stock of paved road networks, stronger political will to foster regional integration, and growing investments in the air transport and railways sub-sectors. However, as progress is achieved, new development challenges also emerge in the sector. These include for example rapid urbanization, regional integration, social inclusiveness, fiscal space for sustainable funding, and resilience to climate change. Transportation facilities attracts people in a specific are, to this day it has been responsible for the attraction of people in most urban parts of Africa. This has further led to the development of these areas. Cities with large numbers of people and highly developed transportation facilities also attract large numbers of people.
Quality of hotel services available in the area. The demands of hotel guests and their expectations tend to change dynamically in the modern hotel industry. When asked to define service, most hotel guests (Mola, Jusoh, 2011) answer using commonplaces such as “getting what I want, when I want it, with a smile and respect”. Despite being too generalized, thus worded expectations still send a clear message – services imply, and customers demand, both tangible and intangible components. The survival of hotels in the existing competitive environment increasingly depends on the quality of service, with the only objective to achieve maximum possible satisfaction levels of hotel guests. Hotel guests‟ satisfaction becomes a key indicator of hotel business and an inevitable condition for achieving competitive advantage and high business performance. Identifying consumers‟ expectations and monitoring, measuring and managing these in terms of quality and satisfaction provides crucial information for business decision making.
An improved water source is an infrastructure improvement to a water source, a distribution system, or a delivery point, which by the nature of its design and construction is likely to protect the water source from external contamination, in particular from faecal matter (Hygiene Improvement Project, 2010). Due to the increasing awareness towards the effect of environmental view amenities on residential property value, factors such as lake, ocean, mountain or panoramic open spaces have also been examined. Several overseas studies have classified environmental amenity according to natural and built environment and discovered that people prefer view of natural environment to build environment (Scott and Canter, 1997).
The roads infrastructure of an area is also imperative in the enabling of people to stay in the area. This has been because it is through the roads that people are able to connect from one place to another hence leading to better and increased efficiency in business transaction by the people because of the quality infrastructure. Han, (2010) indicates that cities with good road network also have large numbers of people in them.
Waste disposal; major challenge in most urban areas is increasing solid waste generations which are the major cause of poor environmental amenities and improper disposal. To address the problem of poor environmental amenities, developed countries have achieved what remains only a dream to the developing countries in providing environmental amenities. For example, in 2010, the European Commission set up a management policy framework for its member countries aimed at promoting and implementing re-use, recovery, recycle and disposal of waste. The target was to ensure 50% re-use and recycling of household waste and 70% of demolition and non-hazardous waste by 2020 (Hall, 2010). Other strategies like waste-to-energy to generate electricity, gas for heating and biofuel out of the municipal solid waste have been adopted. For example, the UK generates 485kg/per capita per year of waste which is collected by the local authorities and more than 40% of it is recycled, a third of it incinerated and only 25% of it land filled (Malinauskaite et al., 2017). Estonia reduced land filling of municipal solid waste to only 5% by 2015.
Drainage; Intensification of human activity causes increasing occurrence of polluting substances in water environment. This attracts attention of political organizations, environ-mentalists and the society. Many scientists and state organizations make every effort to centralize wastewater treatment for the biggest possible number of households. Nevertheless, centralized water supply and wastewater management system is not available for all inhabitants of many districts; some settlements cannot equip such sys-tem due to technical and material reasons. Therefore, the untreated household wastewater usually goes to the next water body (Kuhl et al. 2010).
2.2 Other demand shifters that affect tenants’ willingness to pay
Structural characteristics include all attributes relating to the physical structure of a house itself and its lot. Structural characteristics of a house and its land are the primary contributors to its economic value, because they provide the greatest utility to the owners (Bajic, 1984). It is expected that housing price increases with the number of bedrooms, the number of stories and the size of the lot, and decreases with the age of a house. Furthermore, structural attributes are thought to be more tangible and precisely evaluated than other housing characteristics ( Orford, 1999). For instance, the lot or dwelling area of a house is much easier to measure accurately than distance to transport routes, which means that structural characteristics are sure to be reflected in the housing price. With the selection and importance of structural characteristics, Grether and Mieszkowsk’s (1974) study of the physical attributes of a house found that the living and lot area of the house, the house age, the number of bathrooms, and the number of garages were the most critical factors in determining residential housing price.
locational or accessibility characteristics measure the distance or the travel time from a housing unit to locations of special concern, even though these attributes as locational externalities are unmarked and, thus, are paid for indirectly through housing purchase (Pinch, 1985; Oxford, 1999). For instance, a house’s property
Value can be positively affected by its location near a quality park equipped with good recreation facilities or negatively affected due to its location near a hazardous material facility. That is, accessibility increases property value by decreasing transportation costs which, in turn, bring benefit or utility to the household (Forrest, Glen, & Ward, 1996). Conversely, accessibility removes locational advantages when there is noise, air pollution, and congestion in nearby transport routes or higher crime rates in nearby parks and recreation areas (Sanchez, 1993).
Cost of Educational services; this variable is taken to capture the number of years the respondent spent informal school system. Education is expected to have positive and significant effect environmental quality Thus, the longer period the individual spent in formal school system, the more likely that he/she would be willing to pay more for environmental quality. The household respondents who had attained secondary, post-secondary and graduate level education were more willing to pay for improved solid waste secondary and graduate level education were more willing to pay for improved solid waste management (Okot, 2012). Niringiye (2010) hypothesized that the higher the level of education the more people would appreciate the consequences of mishandling of solid waste and the more value the individual would give in order to avoid the risk of being a victim of unclean environment. (Afroz et al. 2009) also reiterated the fact that education relates to a better understanding of the problem of solid waste and hence willing to ,pay for waste management willing to pay for waste management.(Addai and Danso-Abbeam, 2014).
Incomes of the neighbours; An income refers to the income of the head of the household from all sources. There is a general agreement in the environmental economics literature on the positive relationship between income and demand for improvement in environmental quality (Awunyo, et al., 2013). Therefore, we expect the income to affect the willingness to pay and its amount positively. The finding in the study of urban household’s willingness to pay in improve solid waste disposal services in Kumas Ghana confirmed that general agreement in environmental economics literature on the positive relationship between income and demand for improvement in environmental quality.
Housing costs in an areas this has several attributes. According to Bourne (1981), housing has such attributes as environmental amenities, long life span, slowness in responding to changing demands, complexity and diversity of the housing stock, exogenous influences, policy overlay. Bogart (1998) distinguishes housing from other goods and services by five themes: heterogeneity (i.e., no two houses are same in terms of cost, space, location, and neighbourhood), immobility, durability, large expense in relation to income, and high adjustment costs (e.g., moving expenses and transportation cost). Even though other goods and services contain some of those characteristics, none has all of them (Bogart, 1998). Housing also confers status, social position, wealth, power, aspirations, and personal identity (Adams, 1984).
Price of goods and services; the theory of hedonic price functions a framework for analysis of differentiated goods like Hedonic pricing models housing units, whose individual features do not have observable market prices. A differentiated product can be represented as a vector of characteristics with the market price dependent upon the set of features. The market price of product of implicitly reveals the hedonic price function relating characteristics to prices. The tradition use of hedonic estimation in housing studies has been for the purpose of making inferences about non-observable value of different attribute like air quality, airport noise, commuter access (railway, subway or highway) and neighbourhood amenities (Rosen, 1974).
Houses in the urban areas are not only a consumption good but also an investment good, reflected by the rental values of houses (Umeh & Oladejo, 2015). The value of houses usually depends on locational, structural, neighborhood, community, environmental and land cover attributes (Babalola, Umar, & Sulaiman, 2013; Zoppi, Argiolas, & Lai, 2015). Structural and locational features explicitly determine housing rents (Irfan, 2007) Households primarily evaluate structural characteristics i.e. numbers of rooms and toilets; position of flat and location; and neighborhood features i.e. proximity to schools, public space, shops, workplaces, hospitals and police stations in order to settle rent in the housing market (Schläpfer, Waltert, Segura, & Kienast, 2015; Ooi et al., 2014; Ardeshiri, 2014).
2.3 Influence of income on tenants’ willingness to pay for improved environmental amenities
Uganda’s rental sector is large and growing; an estimated 71% of households in the capital city, Kampala, rent their dwellings (Uganda National Household Survey 2016/17), while over one fifth of all households nationally rent. The National Bureau of Statistics collects some useful data including data on the number of households who rent, the quality of accommodation they live in, and some details of rentals paid. This focus note explores this available rental data, and presents some new data that has been recently collected to understand additional aspects of the market.
According to Addai and Danso-Abbeam, (2014) the income of the individual has an influence on the way an individual chooses their place of residence. The income of the different genders influences the different sexes differently. Different gender categories have completely unparrell interest when it comes to looking for a place to stay or rent. Most female gender always prefer to stay in an area where there is good sanitation and the neighbourhood is secure. Rental markets operate within an overall environment in which landlords and tenants supply and demand rental accommodation. Their practices, terms and conditions are shaped by the macro-economic environment and their capacity to engage is enabled by support organizations such as developers, financers, credit bureaus and rental managers.
According to (Newell, Pizer, & Raimi, 2019) in a study in New York it was discovered that the female professionals with high incomes always rented in high end areas with high levels of security and in a related study in Lagos it was also discovered the female professionals always rented expensive houses which took almost 40% of their monthly salary.
Many authors have analyzed the effects of socioeconomic and cognitive variables on household’s willingness to pay for a service. Afroz, et al. 2009 in their analysis on the household’s willingness to pay for improved solid waste management in Daka city, Bangladesh maintained that age, household size and income maintain an increasing function with consumers’ willingness to pay for improved environmental quality. However, they found female to have positive influence on consumers willing to pay and males to have negative influence on consumers willing to pay Niringiye (2010)
On the level of income of the bueyrs determining their choice of stay it was further revealed by that Addai and Danso-Abbeam, (2014) , that in the South African city of Johannesburg it was revealed that young adult professional always preferred to stay in luxurious places with good security and it was also further revealed that the older people always preferred to stay in the outskirts of the city (Afroz, et al. 2009).
The income of tenant was also closely related to the age of the tenants Arku, Luginaah, & Mkandawire, (2012), indicates that different age groups always have different preferences for an area where they stay. Young professional prefer luxurious and well fenced building unlike the older people who prefer staying in areas far from the city.
Aggrey & Douglason (2010) and (Awunyo, et al. 2013),people of high income always prefer to stay in a place with good saniatation and therefore they prefer to stay in places with good hygiens and waste management system and on the same note Addai & Danso-Abbeam, (2014). Reveal that middle age group in the age range of 21 to 60 were found to be more willing to pay for improved environmental quality than older ones (above 60) and younger ones (below 20). This was because old people (above 60) considered environmental improvement as government’s responsibility while young ones (below 20) just did not feel responsible for improved environmental quality and were therefore less willing to pay for it. The middle age generation, with big family responsibilities, better understood the implications of poor environmental quality and were more familiar with cost sharing and were therefore more willing to pay for improved environmental services.
The wealthy marital partners of the household head is expected to influence the value the individual places on house of stay. Married people usually prefer to stay in in houses with big spaces while single people usually rent small spaces due to limited family size (Aggrey and Douglason, 2010).
People of high incomes but educated also have a preference of settlement which is different fropm that of people with high come but illiterate, the availability of educational services affects the choice of the tenants. Most of the tenants especially the married people with the family prefer to stay in an area were educational services can be accessed easily. The young people who are studying will also rent houses that are near the education facilities like universities, secondary schools and Tertiary institutions this therefore attracts the people to be in a specific place.
In many studies in Nigerian commercial capital of Lagos indicated that most of the people stayed in a specific area because of their income. The rich always constructed near one another while the low income earners also stayed in slummy areas. In the Nairobi poor neighbourhoods of Kibera , majority of the inhabitants are low income earners this indicates that the poor always leave in a specific area (Ibem, Ayo-Vaughan, Oluwunmi, & Alagbe, 2019).
