Proceedings of ISER International Conference, Venice, Italy, 21 st –22 nd January, 2020 1 WILLINGNESS TO PAY METHOD FOR MEASURING THE EXTERNAL COST OF NOISE POLLUTION ODYSSEAS KOPSIDAS School of Economics and Busssiness, Neapolis University Paphos, 2 Danais Avenue, 8042, Paphos, Cyprus E-mail: odykopsi@yahoo.gr Abstract - The purpose of this study is to evaluate the environmental benefit of reducing noise pollution and express the benefits in monetary units using the technique of „Contingent Valuation Method‟ (CVM). Until now, the sound protection technology was paid by the citizens through taxation. As the evaluation of the environmental benefit i.e. public good cannot be expressed by market forces, a modified version of the Contingent Valuation Method was applied. With the scope of determining valuable feedback from the interviewees, we intend to examine how the citizens are willing to pay for the related expansion of noise barriers (WTP) along the regional highway of Thessaloniki in Greece. Questionnaires were distributed to residents in areas located along the peripheral highway of Thessaloniki and processing of responses was done using the SPSS - Statistics. Measurements were made with a sound level meter after noise barriers were installed along the regional highway of Thessaloniki to calculate the noise reduction levels. The measurements showed that in areas where there were noise barriers, noise was reduced to about approximately 1/3 compared with no noise barriers. It is proposed three alternative business models for noise reduction which are all responsible and taking into account the total macroeconomic social welfare. Keywords - Environmental Benefit, Public Good, CVM, Questionnaire, Noise, Noise Barrier, Sound Level Meter I. INTORODUCTION The noise pollution caused by vehicles traveling on the ring road of Thessaloniki in Greece was conducted using noise measuring tools that provided the data associated with Experimental Economics. Using that evaluation data we propose to develop a teaching method on the environment and to calculate the total benefit to the residents who live near and around the highway (Barbier, E.B, 1993). Experimental Economics, as a branch of Economic Science, has traveled a similar path to that of general economic theory from at least the 18th century (Baron MG, and all, 1997). Each resource alone or in combination with others can be used in alternative ways. The potential problem that arises is how natural resources are distributed optimally (Bohm, P., 1972). Thus, the authors believe that the problem of the environmental cost of noise pollution is basically studied by Microeconomic Theory and its investigation involves the use of basic concepts and analytical tools of Neoclassical Microeconomic Theory (Brouwer, R., and all, 2003). The basic idea of the valuation of environmental goods, as in the sound protection barriers, is based on the preferences of individuals (or householders) in relation to the environment, and the willingness to pay for the public good. The option is either to enjoy the environmental good or alternatively to accept the loss of this environmental good (Brouwer, R., and all 1999). The economic concept of value has been the foundation of the Neoclassical Theory of Economic Welfare (Welfare Economics) (Carson, R.T., Mitchell, R.C., 1993). Welfare Economics is based on the consideration and purpose that any economic activity is to increase prosperity (well- being) of each person in society, and that the citizen is best suited to decide on such matters himself (Coller, M. and Harrison, GH, 1995). The benefit that each person receives, depends on the consumption of private goods and the use of state services because a large percentage of the citizenry are making decisions on non-tradable goods and services based on the quantity and quality of the public goods that results from the environment itself (Philip Coopera and all, 2004). The criteria which shows the valuation of some goods and the cost of some changes in the natural environment is whether they will affect human welfare or not (Cropper, M.L. and Oates, W.E., 1992). II. METHODOLOGY Fig.1. CASELLA, CEL 440 sound level meters All the measurements were made with a special sound meter in situ and followed the same steps. The measurements were made under the same conditions so that there is uniformity in the results. The CASELLA, CEL 440 sound level meters, was placed at a height of 1.5 meters from the ground. The sound level meter was positioned parallel to the ground and the microphone directed on the road. During the