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Reports of Water Quality Violations Induce Consumers to Buy Bottled Water

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  • Pape, Andreas Duus
  • Seo, Misuk

Abstract

The 1996 Safe Drinking Water Act Amendments required that water utilities send quality reports to customers. We test whether receiving such reports of health violations increases purchases of bottled water using newly released data and disaggregate changes in demand at the intensive and extensive margins. We find that a water-quality violation makes American households 25 percent more likely to purchase bottled water and, among purchasers, expenditures increase 4–7 percent, both larger responses than found in previous studies. Consumers spend approximately $300 million per year—about 4 percent of annual national spending on bottled water—to avoid health risks associated with violations.

Suggested Citation

  • Pape, Andreas Duus & Seo, Misuk, 2015. "Reports of Water Quality Violations Induce Consumers to Buy Bottled Water," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 44(1), pages 1-16, April.
    • Handle: RePEc:ags:arerjl:200997
    DOI: 10.22004/ag.econ.200997
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    More about this item

    Keywords

    Consumer/Household Economics; Demand and Price Analysis; Environmental Economics and Policy; Food Consumption/Nutrition/Food Safety; Public Economics; Resource /Energy Economics and Policy; Risk and Uncertainty;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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