The contribution of this study to the literature is threefold. First, to our knowledge, this is the first contingent valuation study conducted in China on the value of a specific SWM project, although one can find research papers on the general situation of China’s solid waste management service in the aspects of technology, management and cost-benefit analysis (Yang, 1996; Ward and Li, 1993; World Bank, 2005; Huang et al. 2006; Ye and Qin, 2008; Zhuang et al., 2008). Secondly, instead of focusing on big cities, as most of the previous studies did, our study is conducted to value SWM services in small towns. This is to echo the recent discussions (World Bank, 2005) about the complicated financing aspects for China’s SWM. It was pointed out that national government’s funding on public services has been mostly allocated to big cities such as Beijing and Shanghai, which may have already had a large industrial and commercial base to support revenue generation for public services and had high capacities to attract private sector investment. It will be in the smaller cities where financing for municipal solid waste management becomes one of the fastest growing budget categories for the local governments. The growing SWM budget requirements are further complicated by the rapidly growing costs to manage special wastes, such as hazardous waste, medical waste, and wastewater treatment sludge. This study is therefore timely in terms of helping better understanding of economic value of financing such a public SWM project in small cities and towns.

Thirdly, this study provides a new practical test on the contingent valuation methodology. The multiple bounded discrete choice (MBDC) value elicitation method is employed in this study. Compared to the traditional single and double bounded dichotomous choice (DC) method, the MBDC format combines two aspects of value elicitation format development. On one hand, the MBDC format allows each respondent to vote repeatedly on an ordered sequence of referendum thresholds, and therefore reduces the impact of the ―anchoring‖ heuristic (Tversky and Kahneman, 1974) which often presents in single or double bounded questions. The repeated referendum thresholds can provide more data to verify the coherence and credibility of the valuation results. On the other hand, in MBDC format, for each referendum threshold, a scale of ―polychotomous choice‖ response options varying from ―Definitely No‖, ―Probably Yes‖, ―Not Sure‖, ―Probably No‖ to ―Definitely Yes‖ is also provided. The polychotomous choices provide the possibility to detect and treat the potential significant uncertainties presented in each response and therefore guaranties more reliable estimations. However, the MBDC format is thought to require more cares in implementation, and confidence in successfully implementing a MBDC CV survey has not been built up, as not many MBDC studies have been conducted. This study is one of the few MBDC studies conducted so far.

This paper is organized as follows. Section 2 gives a short review on the existing valuation studies of municipal SWM project. Section 3 presents the Chinese context and the Eryuan municipal solid waste collection and treatment project. The contingent valuation survey is presented in section 4. The estimation results are reported in Section 5. Section 6 concludes the paper.

# **2. Previous Valuation Studies on Solid Waste Management**

As mentioned above, 19 CV studies have been found which had at least partially used the contingent valuation method to value the benefits of SWM projects. Most of the studies published before 2000 are for projects in the developed countries, but after 2000, more papers are found on projects in the developing world. The study subjects in the developing countries are also very different from those in the developed countries. With the relatively well established public SWM system, the CV studies conducted in the developed countries are 4