Reliability of Drinking Water: Risk Perceptions and Economic Value
Alfred Appiah,
Wiktor Adamowicz,
Patrick Lloyd-Smith and
Diane Dupont
Additional contact information
Alfred Appiah: Department of Resource Economics and Environmental Sociology, University of Alberta, 515 General Services Building, Edmonton AB T6G 2H1, Canada
Water Economics and Policy (WEP), 2019, vol. 05, issue 02, 1-27
Abstract:
This paper estimates the monetary value of drinking water supply reliability in Alberta, Canada. We use the results of an online stated preference survey that elicited respondents’ experiences with, and numerically expressed future risk perceptions of, three types of water outages: short-term outages, longer-term outages and boiled water advisories. Respondents with non-zero risk perceptions were presented with alternative programs that reduced these risks, but increased their water bills. Using cost and other program attributes as explanatory variables, we measured the probability of supporting the programs. The survey results indicated that respondents have not experienced many water outages in the last 10 years, but expect outages to be more frequent over the next 10 years. Using the sample of respondents with non-zero beliefs in the likelihood of future water outages, we calculated a mean willingness to pay (WTP) per household of $71 per year for at least a 50% reduction in the likelihood of a short-term water outage. Results from spike models using responses of all respondents, regardless of their expressed risk perceptions, indicate a WTP of $46 per year for at least a 50% reduction in the risk of short-term water outages. We also used a control function approach to control for potential endogeneity associated with the use of elicited perceived risks in the model and found small differences in WTP estimates. These values provide policy makers with quantified benefits that can be compared to investment costs in traditional water treatment or source water protection.
Keywords: Water reliability; risk perceptions; zero willingness to pay; spike models; endogeneity; control function (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)
Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S2382624X18500200
Access to full text is restricted to subscribers
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:wsi:wepxxx:v:05:y:2019:i:02:n:s2382624x18500200
Ordering information: This journal article can be ordered from
DOI: 10.1142/S2382624X18500200
Access Statistics for this article
Water Economics and Policy (WEP) is currently edited by Ariel Dinar
More articles in Water Economics and Policy (WEP) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().