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Willingness to Pay and Willingness to Accept Compensation for Changes in Urban Water Customer Service Standards

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  • Darla Hatton MacDonald

    ()

  • Mark Morrison

    ()

  • Mary Barnes

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    Abstract

    In this paper, we explore the use of choice modelling for obtaining implicit prices for attributes associated with changes in the reliability of household water services. While not often estimated in practice, the collection of information about willingness to accept compensation is relevant for utilities as customers often have implicit or explicit property rights for particular levels of customer service. Given ageing infrastructure in many cities, maintaining customer service standards requires large capital expenditures. It may be more economically efficient to allow standards to decline in some areas and compensate consumers. Therefore it is useful to understand the value of attributes of water service provision using willingness to accept and how this differs from willingness to pay. We therefore estimate both willingness to accept and willingness to pay measures, and find that respondents value a larger range of attributes using the willingness to accept approach. Copyright Springer Science+Business Media B.V. 2010

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    File URL: http://hdl.handle.net/10.1007/s11269-010-9599-7
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    Bibliographic Info

    Article provided by Springer in its journal Water Resources Management.

    Volume (Year): 24 (2010)
    Issue (Month): 12 (September)
    Pages: 3145-3158

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    Handle: RePEc:spr:waterr:v:24:y:2010:i:12:p:3145-3158

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    Web page: http://www.springer.com/economics/journal/11269

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    Related research

    Keywords: Choice modelling; Price of water; Urban water; Willingness to accept compensation; Willingness to pay;

    References

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    Cited by:
    1. Chao Bao & Chuang-lin Fang, 2012. "Water Resources Flows Related to Urbanization in China: Challenges and Perspectives for Water Management and Urban Development," Water Resources Management, Springer, vol. 26(2), pages 531-552, January.
    2. Julia Martin-Ortega & Giacomo Giannoccaro & Julio Berbel, 2011. "Environmental and Resource Costs Under Water Scarcity Conditions: An Estimation in the Context of the European Water Framework Directive," Water Resources Management, Springer, vol. 25(6), pages 1615-1633, April.

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