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Joint Production and Averting Expenditure Measures of Willingness to Pay: Do Water Expenditures Really Measure Avoidance Costs?

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  • Bryan J. Hubbell
  • Jeffrey L. Jordan

Abstract

A multinomial selection model of averting behavior in response to water contamination risks is estimatedfor Georgia residents. Measures of non-health related water quality (taste, odor, and appearance) are incorporated into the model to account for joint production of utility and health. The model examines the choice between bottled, filtered tap, and unfiltered tap water. Results of the estimation indicated that perceived risk from tap water, concern about water quality (taste, odor, and appearance of tap water), race, and age are the most important determinants of bottled water selection. Information regarding current or prior problems with tap water, perceived risk from tap water, and income are the most important determinants of water filter selection. Adjusting for quality differences between tap and bottled water, we show that averting costs estimates using bottled water expenditures would lead to an overstatement of avoidance costs by about 12%. Copyright 2000, Oxford University Press.

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Bibliographic Info

Article provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.

Volume (Year): 82 (2000)
Issue (Month): 2 ()
Pages: 427-437

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Handle: RePEc:oup:ajagec:v:82:y:2000:i:2:p:427-437

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Cited by:
  1. Cai, Yongxia & Shaw, W. Douglass & Wu, Ximing, 2008. "Risk Perception and Altruistic Averting Behavior: Removing Arsenic in Drinking Water," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6149, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. repec:hal:cesptp:halshs-00497453 is not listed on IDEAS
  3. Seo, Misuk & Pape, Andreas Duus, 2011. "Reports of Water Quality Violations induce Consumers to buy Bottled Water," MPRA Paper 28207, University Library of Munich, Germany.
  4. Olivier Beaumais & Anne Briand & Katrin Millock & Céline Nauges, 2010. "What are Households Willing to Pay for Better Tap Water Quality ? A Cross-Country Valuation Study," Documents de travail du Centre d'Economie de la Sorbonne 10051, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
  5. Jyotsna Jalan & E.Somanathan & Saraswata Chaudhuri, 2003. "Awareness and the demand for environmental quality: Drinking water in urban India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 03-05, Indian Statistical Institute, New Delhi, India.
  6. Easter, K. William & Konishi, Yoshifumi & Raggi, Meri & Viaggi, Davide, 2006. "What are the Economic Health Costs of Non-Action in Controlling Toxic Water Pollution?," Conference Papers 6656, University of Minnesota, Center for International Food and Agricultural Policy.
  7. Tenwalde, Tracy & Jones, Eugene & Hitzhusen, Frederick J., 2005. "An Economic Analysis of Consumer Expenditures for Safe Drinking Water: Addressing Nitrogen Risk with an Averting Cost Approach," 2005 Annual meeting, July 24-27, Providence, RI 19431, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Christophe Bontemps & Céline Nauges, 2010. "Carafe ou bouteille ? Le rôle de la qualité de l’environnement dans la décision du consommateur," INRA Sciences Sociales, INRA Department of Economics.
  9. Bilgic, Abdulbaki & Eren, Gunes & Florkowski, Wojciech J., 2008. "Willingness to Pay for Potable Water in the Southeastern Turkey: An Application of both Stated and Revealed Preferences Valuation Method," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6755, Southern Agricultural Economics Association.
  10. Mirajul Haq & Usman Mustafa & Iftikhar Ahmad, 2007. "Household s Willingness to Pay for Safe Drinking Water: A Case Study of Abbottabad District," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 1137-1153.
  11. repec:hal:journl:halshs-00497453 is not listed on IDEAS
  12. Jakus, Paul M. & Shaw, W. Douglass & Nguyen, To N. & Walker, Mark, 2009. "Risk Perceptions of Arsenic in Tap Water and Consumption of Bottled Water," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49221, Agricultural and Applied Economics Association.
  13. Konishi, Yoshifumi & Coggins, Jay S., 2008. "Environmental risk and welfare valuation under imperfect information," Resource and Energy Economics, Elsevier, vol. 30(2), pages 150-169, May.
  14. Bernal García, Juan Jesús & Martínez Maria-Dolores, Soledad María & Sánchez García, Juan Francisco, 2006. "Study of the potentiality of the electronic commerce in the Region of Murcia by means of a model of logistic regression/Estudio de la Potencialidad del Comercio Electrónico en la Región de Murcia me," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 24, pages 499-529, Abril.
  15. Konishi, Yoshifumi & Adachi, Kenji, 2011. "A framework for estimating willingness-to-pay to avoid endogenous environmental risks," Resource and Energy Economics, Elsevier, vol. 33(1), pages 130-154, January.
  16. Diane P. Dupont & W.L. Adamowicz & Alan Krupnick, 2009. "Differences in Water Consumption Choices in Canada: the Role of Socio-demographics, Experiences, and Perceptions of Health Risks," Working Papers 0906, Brock University, Department of Economics.
  17. Iftikhar Ahmad & Miraj ul Haq & Abdul Sattar, 2010. "Factors Determining Public Demand for Safe Drinking Water (A Case Study of District Peshawar)," Development Economics Working Papers 22826, East Asian Bureau of Economic Research.

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