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Consumers’ Preferences and Derived Willingness-to-Pay for Water Supply Safety Improvement: The Analysis of Pricing and Incentive Strategies

Author

Listed:
  • Jia Wang

    (Department of Economic and Trade Management, Suzhou Vocational Institute of Industrial Technology, Suzhou 215104, China)

  • Jiaoju Ge

    (School of Economics and Management, Harbin Institute of Technology (Shenzhen), Shenzhen 518055, China)

  • Zhifeng Gao

    (Department of Food and Resource Economics, University of Florida, Gainesville, FL 32603, USA)

Abstract

With increasing water supply accidents and higher water demand, urban water supply safety (WSS) remains a crucial public policy issue in developing countries. The purpose of this paper is to investigate consumers’ willingness-to-pay (WTP) and their preferences to improve WSS in China, to support governments in water regulation policy design and water providers in investment-decisions. A discrete choice experiment method with the consideration of not only attributes of WSS but also attitudinal and demographic variables have been adopted to assess consumers’ WTP and preferences for WSS improvement. The results show that Chinese urban residents are willing to pay a significantly higher price for improved WSS. Demonstrated marginal mean WTP for the change of the attributes range from 0.18 RMB/m 3 (0.03 USD/m 3 ) (1 RMB was around 0.154 USD in 2016) for decreased water supply interruption to 2.33 Yuan RMB/m 3 (0.35 USD/m 3 ) for improved drinking water quality. Investments in water processing facilities and water distribution networks should come first. Cross-subsidy concerning different developing districts is the most efficient policy instrument. The study contributes to the recent literature not only by introducing attitudinal variables in choice experiment survey in water supply field, but also by revealing the correlation of choice modeling applications in WSS improvement programs.

Suggested Citation

  • Jia Wang & Jiaoju Ge & Zhifeng Gao, 2018. "Consumers’ Preferences and Derived Willingness-to-Pay for Water Supply Safety Improvement: The Analysis of Pricing and Incentive Strategies," Sustainability, MDPI, vol. 10(6), pages 1-16, May.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:6:p:1704-:d:148612
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    2. Sana AKHTAR & Sarah DEAN & Faiza ANJUM & Maryam JAVED, 2018. "Determination of Willingness to Pay for Improved Water Supply in Selected Areas of Lahore," Chinese Journal of Urban and Environmental Studies (CJUES), World Scientific Publishing Co. Pte. Ltd., vol. 6(02), pages 1-12, June.
    3. Alfonso Expósito, 2019. "Valuing Households’ Willingness to Pay for Water Transfers from the Irrigation Sector: A Case Study of the City of Seville (Southern Spain)," Sustainability, MDPI, vol. 11(24), pages 1-18, December.
    4. Che Ibrahim, Nur Syuhada & Kamaludin, Mahirah & Shaari, Nur Fatihah, 2019. "A Discrete Choice Experiment in Estimate Public Willingness to Pay for Attributes of Water Services in Terengganu, Malaysia," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 53(2), pages 213-225.
    5. Jia, Zhijie & Lin, Boqiang, 2021. "The impact of removing cross subsidies in electric power industry in China: Welfare, economy, and CO2 emission," Energy Policy, Elsevier, vol. 148(PB).
    6. Nur Syuhada, C.I. & Mahirah, K. & Roseliza, M.A., 2020. "Dealing with attributes in a discrete choice experiment on valuation of water services in East Peninsular Malaysia," Utilities Policy, Elsevier, vol. 64(C).
    7. Katarzyna Pietrucha-Urbanik & Janusz R. Rak, 2020. "Consumers’ Perceptions of the Supply of Tap Water in Crisis Situations," Energies, MDPI, vol. 13(14), pages 1-20, July.

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