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Measuring the Willingness to Pay for Tap Water Quality Improvements: Results of a Contingent Valuation Survey in Pusan
Environmental Policy Research Group, Korea Environment Institute, 290 Jinheung-Ro, Eunpyeong-Gu, Seoul 122-706, Korea
Graduate School of Energy and Environment, Seoul National University of Science and Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 139-743, Korea
Department of Energy IT, Gachon University, Bokjeong-Dong, Sujeong-Gu, Seongnam-Si, Gyeonggi-Do 461-701, Korea
* Author to whom correspondence should be addressed.
Received: 31 July 2013; in revised form: 25 September 2013 / Accepted: 25 September 2013 / Published: 10 October 2013
Abstract: With increasing concern regarding health, people have developed an interest in the safety of drinking water. In this study, we attempt to measure the economic benefits of tap water quality improvement through a case study on Pusan, the second largest city in Korea. To this end, we use a scenario that the government plans to implement a new project of improving water quality and apply the contingent valuation (CV) method. A one-and-one-half bounded dichotomous choice question (OOHBDC) format is employed to reduce the potential for response bias in multiple-bound formats such as the double-bound model, while maintaining much of the efficiency. Moreover, we employ the spike model to deal with zero willingness to pay (WTP) responses from the OOHBDC CV survey. The CV survey of 400 randomly selected households was rigorously designed to comply with the guidelines for best-practice CV studies using person-to-person interviews. From the spike OOHBDC CV model, the mean WTP for the improvement was estimated to be KRW 2,124 (USD 2.2), on average, per household, per month. The value amounts to 36.6% of monthly water bill and 20.2% of production costs of water. The conventional OOHBDC model produces statistically insignificant mean WTP estimate and even negative value, but the OOHBDC spike model gives us statistically significant mean WTP estimate and fitted our data well. The WTP value to Pusan residents can be computed to be KRW 31.2 billion (USD 32.1 million) per year.
Keywords: tap water quality improvement; contingent valuation; willingness to pay; one-and-one-half bounded; spike model
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Kwak, S.-Y.; Yoo, S.-H.; Kim, C.-S. Measuring the Willingness to Pay for Tap Water Quality Improvements: Results of a Contingent Valuation Survey in Pusan. Water 2013, 5, 1638-1652.
Kwak S-Y, Yoo S-H, Kim C-S. Measuring the Willingness to Pay for Tap Water Quality Improvements: Results of a Contingent Valuation Survey in Pusan. Water. 2013; 5(4):1638-1652.
Kwak, So-Yoon; Yoo, Seung-Hoon; Kim, Chang-Seob. 2013. "Measuring the Willingness to Pay for Tap Water Quality Improvements: Results of a Contingent Valuation Survey in Pusan." Water 5, no. 4: 1638-1652.