Willingness to pay for improvements in drinking water quality

Abstract

In this paper, data from a 1991 survey of Georgia residents were used to study people's willingness to pay (WTP) for improvements in drinking water quality and people's perceptions of potential groundwater contamination. Results showed that 27% of the respondents served by public water supplies rated drinking water quality as poor, and 23% were uncertain about their drinking water quality. The contingent valuation method was used to estimate WTP using a checklist format. The median estimated WTP was $5.49 per month above their current water bills for people on public systems and $7.38 for those using private wells, after rejecting outliers and using the maximum likelihood method. The aggregate WTP for all of Georgia was estimated to be about $I 11.5 million per year for public water users and $42.3 million per year for private well owners. This aggregate WTP can serve as an estimate of benefits to consumers from improvements in drinking water quality statewide. INTRODUCTION Agricultural activity can have adverse effects on the environment, including surface and groundwater quality, air quality, wetlands, and human health as a result of pesticide exposure and pesticide residue on food [U.S. Environmental Protection Agency (EPA), 1987]. Over the past 20 years, point source pollution in surface water has been extensively regulated, resulting in a 95% reduction in pollutant loadings [EPA, 1986]. Consequently, nonpoint source pollution, the type caused primarily by agriculture, is now responsible for the large majority of remaining water quality problems. In 1986, nonpoint source pollution accounted for 76% of the remaining loadings in all U.S. lakes, 65% in the nation's rivers and streams, and 45% in the country's estuaries [EPA, 1986]. According to the U.S. Environmental Protection Agency (EPA), agricultural activities account for 50-70% of the nonpoint source loadings [EPA, 1986]. The damage that sediment, nutrients, and other soil erosion-related pollutants cause in streams, lakes, reservoirs, and estuaries has been estimated between $3 and $13 billion in 1980 [Clark, 1985]. Groundwater is a source of drinking water for almost 50% of the U.S. population and over 90% of rural households [Sarnat et al., !987; Walker and Hoehn, 1990]. Nearly one fourth of the U.S. population relies on groundwater pumped from areas with a significant chemical use [Lee and Nielsen, 1989]. A recent survey by the EPA revealed that more than 50% of the nation's wells contain traces of nitrate [Rahm, 1990]. A recent U.S. EPA [1990] survey, based on data from 1300 wells in all 50 states in 1988-1989, found that !9 million people are exposed to nitrates in wells with 1.5 million facing nitrate concentration above the 10 parts per millionth contamination level. The survey also found that 85 million additional people are exposed to nitrates in their community water systems with three million people facing nitrates over 10 ppm. Exposure to nitrates can have severe health consequences such as methemoglobinemia (blue baby disease) in infants and...

Willingness to pay and municipal water pricing in transition: a case study

“…Alberini et al (1997) found educational attainment to be a statistically significant determinant of the WTP. Jordan and Elnagheeb (1993) have also found the education variable to be positive and significant indicating that respondents with a higher level of education were willing to pay more than respondents with a lower level of education. Awareness really matters in a CV study where a hypothetical scenario is presented to the respondents.…”

“…The mean or median WTP for the households which already have a municipal surface water supply connection is less than those not having a surface water supply connection. Jordan and Elnagheeb (1993) in their study found that private well water users were willing to pay more than households using the public water supply system. They concluded that as people connected to the public water supply system are presently paying the water companies for water, they are less willing to pay.…”

“…CV studies have become more and more acceptable as a useful tool to estimate WTP for desirable quality water and are often used (Jordan and Elnagheeb 1993, Kwak and Russell 1994, Griffin et al 1995, Whittington et al 2002, Dasgupta and Dasgupta 2004 as an instrument where markets are absent, imperfect or incomplete. Studies by Kwak and Russel (1994), Whittington et al (2002), Dasgupta and Dasgupta (2004) have proved that a CV study, though unfamiliar in developing countries, is applicable for assessing WTP for water.…”

Valuation of groundwater quality using a contingent valuation‐damage function approach

“…These studies can be categorized by how the valuation "scenarios" are structured. One group follows Edwards' lead by specifying an "objective hypothetical" initial exposure condition and an alternative hypothetical improvement [Jordan and Elnagheeb, 1993;Sparco, 1995;Crutchfield et al, 1997;Delavan, 1996]. Other studies have allowed respondents to specify their own "subjective" probabilities of exceeding health standards [Sun et al, 1992;Poe, 1993] or perceptions of current safety levels [Powell, 1991], with the target being the reduction of the probability of exceeding standards to zero or the improvement of water quality to safe levels.…”

Valoración económica del agua potable en la delegación Iztapalapa, D. F.

“…In their reserach on willingness to pay for improvements in the quality of drinking water Jordan and Elnagheeb (1993) in Georgia, United States of America, using the contingent valuation method, estimated an average of DAP of $ 5.49 dollars monthly, over the rate that were already paying, and those with access to private wells up to $ 7.38 dollars. However, Polyzou et al (2011) found that, for different reasons, not always the users of drinking water service are willing to pay for an upgrade as they found that only 40% of respondents were willing to contribute some amount to improve the quality of drinking water.…”