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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

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  • Mark Morrison

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  • 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

Suggested Citation

  • Darla Hatton MacDonald & Mark Morrison & Mary Barnes, 2010. "Willingness to Pay and Willingness to Accept Compensation for Changes in Urban Water Customer Service Standards," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 24(12), pages 3145-3158, September.
  • Handle: RePEc:spr:waterr:v:24:y:2010:i:12:p:3145-3158
    DOI: 10.1007/s11269-010-9599-7
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    References listed on IDEAS

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    Cited by:

    1. Jimenez, Raul & Serebrisky, Tomas & Mercado, Jorge, 2016. "What does “better” mean? Perceptions of electricity and water services in Santo Domingo," Utilities Policy, Elsevier, vol. 41(C), pages 15-21.
    2. Zhang, Fan & Fogarty, James, 2015. "Nonmarket Valuation of Water Sensitive Cities: Current Knowledge and Issues," Working Papers 207694, University of Western Australia, School of Agricultural and Resource Economics.
    3. 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: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 25(6), pages 1615-1633, April.
    4. 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: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(2), pages 531-552, January.

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