Responding to the Cry of the Earth: The Use of Willingness-to-Pay Methodology for Assessing Environmental Policies and Programs

This essay examines public support and individual preferences for green finance through the lens of Pope Francis’s Laudato Si’ and his exhortation to respond to the cry of the earth. Green finance focuses on fostering environmental sustainability and is closely aligned with the themes of caring for our common home and responding to the cry of the earth. However, green finance needs funding to address the exigencies of climate change and is currently facing a climate funding gap. One innovative strategy to close this gap posits the robust use of Environmental Impact Assessment (EIA) processes, which can estimate the environmental effects and costs/benefits of proposed projects. These assessments can better inform policy decisions and project evaluations, as well as guide resource and budgetary allocations. Notably, these assessments are not limited to environmental initiatives and extend to any project or business venture with potential environmental implications. EIA decision-making necessitates understanding individual preferences, and specifically the value placed by the public on environmental goods and services. In this context, willingness-to-pay (WTP) methodologies offer a novel valuation technique for assessing the monetary value individuals place on goods and services, such as clean air and water, which lack market prices. Incorporating WTP into cost-benefit analyses can help policymakers evaluate the feasibility of environmental policies and interventions. These WTP estimates can provide guidelines for budgetary allocations for green financing and can also be useful in assessing the optimality of existing environmental regulations and policies. The purpose of this essay is to demonstrate the potential of WTP as a tool for addressing the climate funding gap. To this end, several studies that utilized this methodology were surveyed. Additionally, this essay explores how WTP methodology aligns with the principles of Laudato Si’, translating ethical advocacy into actionable, multi-stakeholder approaches for sustainable development.