Using Contingent Valuation and Benefit Transfer to Evaluate Water Supply Improvement BENEFITS1

Safe water supply is one of the important Millennium Goals. For development of market water supply services, the willingness of consumers to pay is essential. The consumers' willingness to pay (WTP) for piped water supply using the contingent valuation (CV) method with different starting point bids was investigated for the Pavlodar Region, Kazakhstan. The results showed that households with access to groundwater (well or borehole water users) perceived this as of good quality. Consumers without access to groundwater used open-source, standpipe or delivered water for which they had to travel and spend time or to pay. Open source water and standpipe water quality was perceived as bad or satisfactory. More than 90% of the consumers were willing to pay for better water quality and regular water supply. The mean WTP was estimated to be about 1120 in bids and about 1590 KZT per household per month in open-ended question format (150 KZT is ~1 USD as of January 2012). The results can be used to better identify the proper technological choice and the level of service to be provided making rural water projects both sustainable and replicable at a larger scale.

Water Resources Research - WATER RESOUR RES, 2005

The contingent valuation method (CVM) was used to estimate homeowners' willingness to pay for water leasing to maintain stable lake levels at an irrigation reservoir in a residential neighborhood. A binary logit model was used to analyze households' voter referendum responses for maintaining the lake level. The median willingness to pay (WTP) was found to be $368 per year for lakefront residents and $59 per year for off-lake residents. The median WTP for lakefront residents was significantly different from off-lake residents at the 90% confidence level. Using the median WTP for lakefront and nonlakefront residents, we found that the increase in homeowner association fees would generate approximately $43,000, enough money to lease sufficient water to reach the target higher lake level in a normal water year.

Journal of Environmental Management, 2001

Due to declining federal, state, and local government budgets, there is an increasing need to analyze the benefts of government funded programs to determine where increasingly limited funds would best be spent. The beneft transfer technique is analyzed for the development of a rural water supply system and guidelines for successful benefts transfer are presented. Beneft transfer appears to provide reasonably accurate estimates of natural resource benefts if a broad based beneft model is used. The benefts-transfer-based estimates are accurate as long as a model based on data from a wide variety of conditions is used or the model is based on data from a very similar region. The wide-based data modeling approach has the greatest practical application. These fndings are based upon contingent valuation data obtained from four sites in the western USA.

EDIS

This paper is a part of the EDIS series “Economic Value of Florida Water Resources”. As the other papers in the series discuss, water resources provide us with a variety of goods and services (often referred to as ecosystem services). This paper discusses another ecosystem service that Florida water resources provide: water supply for households needs. In this article, we present several examples of valuing water availability found in literature and focused on Florida and other regions.

2006

The Opequon watershed is located in northern Virginia (VA) and the eastern panhandle of West Virginia (WV). In both states, Opequon Creek is classified as impaired based on violations of bacteria, benthic and biologic standards. Both VA and WV are using Total Maximum Daily Load (TMDL) plans to improve water quality within Opequon Creek. However, these TMDL plans are at different stages with VA being completed and WV still in progress. As part of the TMDL process in VA, this research is based on a contingent valuation survey which was developed to measure the expected monetary benefits of TMDL implementation throughout the Opequon watershed. On the basis of log-likelihood tests of grouped tobit models to explain willingness-to-pay (WTP) for watershed clean-up, VA, WV, and VA riparian landowner respondents were found to consist of different populations.

Journal of Human Ecology, 2012

Water problem in rural areas of Ethiopia is twofold: low coverage levels and poor quality that require urgent attention to reduce associated health and social implications. Women and children spend hours a day collecting water: time that would be better spent in education or productive employment. Cognizant of this fact, the government and donor organizations are currently performing a number of activities to improve the coverage and quality of water supply with partial cost recovery systems. Hence, the affordability and willingness of the consumers that are supposed to be served need to be examined. The primary objective of this study is, therefore, to estimate willingness to pay (WTP) of rural households for improved water service provision and identify its determinant by employing contingent valuation method (CVM) in Haramaya district. The study used primary data obtained from a survey conducted on randomly selected rural households. We used double bounded dichotomous choice elicitation method administered by in-person interview. The data was analyzed using descripti ve statistics and bivariate probit model. Response to the hypothetical scenario revealed that sampled households expressed their WTP with a mean WTP of 27.30 cents per 20 liters jerrycan. The results of bivariate probit model revealed that household income, education, sex, time spent to fetch water, water treatment practice, quality of water and expenditure on water have positive and significant effects on WTP for improved water service provision, while age of the respondent has a negative and significant effect.

Environmental & Resource Economics, 2005

Water consumption and disposal are often taken for granted as essential services with required levels of service quality, yet little is known about how much consumers are willing to pay for specific service levels. As customers in many countries face changing levels of water availability (especially shortages linked possibly to climate change and limited catchment capacity), the need to assess the value (and hence benefit) to society of varying service levels and prices in an effort to secure the provision of and disposal of water has risen on public agendas. In an attempt to establish how much customers are willing to pay for specific levels of service, we use a series of stated choice experiments and mixed logit models to establish the willingness to pay to avoid interruptions in water service and overflows of wastewater, differentiated by the frequency, timing and duration of these events. The empirical evidence is an important input into the regulatory process for establishing service levels and tariffs, as well as useful planning information for agencies charged with finding cost effective ways of delivering services at prices that customers deem to be value for money.

Water problem in developing countries like Ethiopia is twofold: low coverage levels and poor quality that require urgent attention to reduce associated health and social consequences. Understanding this fact, the government and NGOs are currently carrying out several activities to improve the coverage and quality of water supply. To this end, willingness to pay of households that are expected to be benefited from the project should be analysed. The central objective of this study is, hence, to estimate Willingness to Pay (WTP) of households for better-quality water service provision and identify its determinants by using Contingent Valuation Method (CVM) in Jigjiga city. We estimate Willingness to Pay (WTP) for better quality of water supply service on cross-sectional survey of households in Jigjiga city taking 210 sample households randomly drawn. The highest relative WTP for improved water supply service was found in the city with the highest percentage of respondents being unsatisfied with the current water supply both in terms of quality and quantity. Response to the hypothetical scenario shown that sampled households stated that their mean WTP of 94 cents per 20 litres. The results of logit model revealed that household income, family size, water source, age of the respondent and bid value have significant effects on WTP for improved water service provision. The implication is that it is better take into account the socio-economic characteristics of the households in planning and designing water supply projects, which may serve to set rigorous demand oriented projects that can sustain the service delivery.

Agricultural Water Management, 2018

Conversion to surface water irrigation is one of the critical initiatives to address the decline in groundwater supply. A double-bounded dichotomous choice contingent valuation survey is used to estimate producers' willingness to pay (WTP) for surface water supplied by irrigation districts in Arkansas, United States. The estimated mean WTP for irrigation water is 2.7 ¢/m 3 ($33.21/acre-foot). Comparison indicates a significant share of producers are likely to have higher WTPs for surface water than the average pumping cost in the study area. Producers located in areas with less groundwater resources have higher WTPs. Producers that are more concerned with a water shortage occurring in the state in the next 10 years have higher WTPs. A somewhat unexpected result is that participation in the Conservation Reserve Program predicts lower WTPs. One possible explanation is that farmers see the transfer of land out of crop production as a more viable financial decision when groundwater supply decreases.

2002

A contingent valuation survey conducted in Mississippi is used to assess public willingness to pay for reductions in agricultural nonpoint pollution. The analysis focuses on implementation of a policy to provide farmers with precision application equipment to reduce nutrient runoff. Findings suggest public support exists for such policies. This study also finds that inclusion of debriefing questions can be used to refine willingness-to-pay estimates in contingent valuation studies. A nonparametric scope test suggests respondents are sensitive to level of runoff reduction and associated water-quality benefits.

2005

In this paper, we provide an introduction to water quality benefit estimation for noneconomists. Net water quality benefits are typically measured using the concept of consumer surplus, which is estimated using a number of economic valuation methodologies. These are divided into direct and indirect methods. Direct methods involve questioning survey respondents to determine their consumer surplus. Indirect methods use data from consumer market behavior to estimate economic values. When limited time or funding preclude costly data collection and the development of new consumer surplus estimates, the method of benefit transfer is used to tailor preexisting consumer surplus estimates to fit new policy situations. We provide an example of benefit transfer by estimating the value of water quality improvements for the Cape Fear River in North Carolina. Benefit transfer methods are used with three valuation approaches to estimate the benefits of water quality improvement.

Water Resources Management, 2008

The present research is about water supply shortages and low drinking water quality in the Municipality of Rethymno during peak water demand periods. More specifically, the aim of this work is to elicit Rethymno residents' willingness to pay (WTP), by applying the CVM methodology, as the percent over their water bill, for the completion of future projects that the Municipal Enterprise for Water Supply and Sewerage (MEWSS) of Rethymno intends to implement to avoid shortages and improve tap water quality. The current contingent valuation study is performed based on data collected through personal interviews where respondents are asked about their WTP for a given improvement in the water supply. The results point out that female respondents, households with high income, with children, and households which do not use tap water for drinking, are on average willing to pay more. The mean WTP for these future projects was estimated to be 10.64 € (17.67% of the average bill). The mean WTP amount can be useful to decision makers undertaking an environmental cost benefit analysis, where full cost should be recovered. Interviewing people in the context of a valuation scenario, informs them for improvements that will be undertaken from the new projects under consideration and at the same time involves them as users in the decision making process.

2008

Watersheds provide numerous ecosystem services to downstream communities often with no cost to them. Although these services are valuable to humans, they do not have monetary values attached to them, making their total economic value quite ambiguous. This ambiguity results in the non-optimal use of the natural resources that leads to the degradation of the watersheds. One approach that could address this issue is payments for ecological services (PES). The main objective of this study was to estimate the willingness-to-pay for improved watershed services by domestic water users within the Layawan Watershed in Oroquieta City. It employed the contingent valuation method to assess the willingness to pay of water users. More than 50% of the respondents voted positively to the referendum question which is whether they are willing to pay a certain amount for the conservation of the Layawan Watershed or not. The computed mean willingness to pay amounts were Php 57.48 and Php 53.89 per month per household for the parametric and non-parametric estimations, respectively. These amounts translate to 0.68% of the average monthly household income of the sample respondents, which is approximately Php 8 198.84. The amounts computed may serve as bases for a water user fee that may be collected from the domestic water users in the Layawan Watershed as buyers of the watershed services.

Wiley Interdisciplinary Reviews: Water

Water Resources Research, 2014

Benefit transfer (BT) methods are becoming increasingly important for environmental policy, but the empirical findings regarding transfer validity are mixed. A novel valuation survey was designed to obtain both stated preference (SP) and revealed preference (RP) data concerning river water quality values from a large sample of households. Both dichotomous choice and payment card contingent valuation (CV) and travel cost (TC) data were collected. Resulting valuations were directly compared and used for BT analyses using both unit value and function transfer approaches. WTP estimates are found to pass the convergence validity test. BT results show that the CV data produce lower transfer errors, below 20% for both unit value and function transfer, than TC data especially when using function transfer. Further, comparison of WTP estimates suggests that in all cases, differences between methods are larger than differences between study areas. Results show that when multiple studies are available, using welfare estimates from the same area but based on a different method consistently results in larger errors than transfers across space keeping the method constant.