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Floods and Water Service Disruptions: Eliciting Willingness-to-Pay for Public Utility Pricing and Infrastructure Decisions

Author

Listed:
  • James I. Price

    (Environmental Sustainability Research Centre Associate, Brock U., 1812 Sir Isaac Brock Way, St. Catharines, Ontario, Canada L2S 3A1, Canada)

  • Patrick R. Lloyd-Smith

    (Department of Agricultural and Resource Economics and Global Institute for Water Security, U Saskatchewan, 101-121 Research Drive Saskatoon, Saskatoon, Canada S7N 1K2, Canada)

  • Diane P. Dupont

    (Department of Economics, Brock U., 1812 Sir Isaac Brock Way, St. Catharines, Ontario, Canada L2S 3A1, Canada)

  • Wiktor L. Adamowicz

    (Department of Resource Economics and Environmental Sociology, U Alberta, 501 General Services Bldg., Edmonton, Alberta, Canada T6G 2H1, Canada)

Abstract

Devastating floods and ongoing droughts throughout the world highlight the infrastructure and management challenges facing water and wastewater utilities. While increasing variability in climate has been identified as the immediate culprit, the severity of events has been exacerbated by years of underinvestment in infrastructure improvements due to inadequate pricing of services. The American Water Works Association (2015) identifies a crucial step for decision-makers: identify clearly communities’ priorities with respect to water and wastewater management, both of which provide public or community-level goods and services. Using data from two separate choice experiments, collected in the same survey of Canadian households, the current paper estimates household willingness-to-pay (WTP) to reduce the likelihood of flood events and water service disruptions. Results from both choice experiments show a strong preference for policy scenarios that reduce these risks, although there is a substantial amount of heterogeneity. People living in the Prairie region, rural residents, and people living in areas with higher home values have a higher WTP. Although the results lend support to public infrastructure programs for addressing flood and water disruption risks, the degree to which these are preferred to private action is not clear.

Suggested Citation

  • James I. Price & Patrick R. Lloyd-Smith & Diane P. Dupont & Wiktor L. Adamowicz, 2019. "Floods and Water Service Disruptions: Eliciting Willingness-to-Pay for Public Utility Pricing and Infrastructure Decisions," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 5(02), pages 1-20, April.
  • Handle: RePEc:wsi:wepxxx:v:05:y:2019:i:02:n:s2382624x18500212
    DOI: 10.1142/S2382624X18500212
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