IDEAS home Printed from https://ideas.repec.org/a/spr/envpol/v26y2024i3d10.1007_s10018-023-00381-1.html
   My bibliography  Save this article

Willingness to pay for improved water services: evidence from Peru

Author

Listed:
  • Francisco B. Galarza Arellano

    (Universidad del Pacífico)

  • Max Carbajal

    (Pontifical Catholic University of Peru)

  • Julio Aguirre

    (Universidad del Pacífico)

Abstract

We study the willingness to pay (WTP) for a large set of improvements in water service related to quality, continuity, and securing access for people with no house piped water during the COVID-19 pandemic. Using primary survey data from urban Peru, and the contingent valuation method, we estimate a mean WTP of around PEN 4.3 (USD 1.05), 3.7 and 1.8, respectively, for the aforementioned sets of improvements, with the combined WTP representing a 23% increase in the households’ water service monthly bill. The WTP for all sets of improvements is influenced by the expenditure in bottled water (a substitute for tap water, generally perceived as unsafe) and a proxy for household assets. The influence of the individual characteristics typically scrutinized by the literature (e.g., sex, age, and education) varies with the type of improvement examined. We find a significant heterogeneity in WTP across providers and calculate the users’ contribution to a water fund that could crowd-in the public investment in water services’ upgrades. We further discuss the implementation of such water fund.

Suggested Citation

  • Francisco B. Galarza Arellano & Max Carbajal & Julio Aguirre, 2024. "Willingness to pay for improved water services: evidence from Peru," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 26(3), pages 503-539, July.
    • Handle: RePEc:spr:envpol:v:26:y:2024:i:3:d:10.1007_s10018-023-00381-1
    DOI: 10.1007/s10018-023-00381-1
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10018-023-00381-1
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10018-023-00381-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lilia Rodríguez-Tapia & Daniel A. Revollo-Fernández & Jorge A. Morales-Novelo, 2017. "Household’s Perception of Water Quality and Willingness to Pay for Clean Water in Mexico City," Economies, MDPI, vol. 5(2), pages 1-14, April.
    2. Van Houtven, George L. & Pattanayak, Subhrendu K. & Usmani, Faraz & Yang, Jui-Chen, 2017. "What are Households Willing to Pay for Improved Water Access? Results from a Meta-Analysis," Ecological Economics, Elsevier, vol. 136(C), pages 126-135.
    3. Andrés Gómez-Lobo & Mauro Gutiérrez & Sandro Huamaní & Diego Marino & Tomás Serebrisky & Ben Solís, 2024. "Access to water and COVID-19: a regression discontinuity analysis for the peri-urban areas of metropolitan Lima, Peru," Water International, Taylor & Francis Journals, vol. 49(1), pages 52-79, January.
    4. Karen Blumenschein & Glenn C. Blomquist & Magnus Johannesson & Nancy Horn & Patricia Freeman, 2008. "Eliciting Willingness to Pay Without Bias: Evidence from a Field Experiment," Economic Journal, Royal Economic Society, vol. 118(525), pages 114-137, January.
    5. Richard T. Carson & Nicholas E. Flores & Kerry M. Martin & Jennifer L. Wright, 1996. "Contingent Valuation and Revealed Preference Methodologies: Comparing the Estimates for Quasi-Public Goods," Land Economics, University of Wisconsin Press, vol. 72(1), pages 80-99.
    6. Krinsky, Itzhak & Robb, A Leslie, 1986. "On Approximating the Statistical Properties of Elasticities," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 715-719, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Galarza, Francisco & Carbajal Navarro, Max Arturo & Aguirre Montoya, Julio, 2022. "Willingness to pay for improved water service: evidence from urban Peru," Working Papers 22-03, Centro de Investigación, Universidad del Pacífico.
    2. Mohammed H. Alemu & Søren B. Olsen, 2017. "Can a Repeated Opt-Out Reminder remove hypothetical bias in discrete choice experiments? An application to consumer valuation of novel food products," IFRO Working Paper 2017/05, University of Copenhagen, Department of Food and Resource Economics.
    3. Bayham, Jude & Muñoz-García, Félix & Espínola-Arredondo, Ana, 2019. "International coordination of environmental policies: is it always worth the effort?," Environment and Development Economics, Cambridge University Press, vol. 24(3), pages 294-316, June.
    4. Leslie Richardson & John B. Loomis & Patricia A. Champ, 2013. "Valuing Morbidity from Wildfire Smoke Exposure: A Comparison of Revealed and Stated Preference Techniques," Land Economics, University of Wisconsin Press, vol. 89(1), pages 76-100.
    5. 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.
    6. Moore, Rebecca & Bishop, Richard C. & Provencher, Bill & Champ, Patricia A., 2009. "Accounting for Respondent Uncertainty to Improve Willingness-to-Pay Estimates," Staff Papers 92233, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    7. Rolfe, John & Dyack, Brenda, 2010. "Testing for convergent validity between travel cost and contingent valuation estimates of recreation values in the Coorong, Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 1-17.
    8. Maciej Sobolewski & Michał Paliński, 2017. "How much consumers value on-line privacy? Welfare assessment of new data protection regulation (GDPR)," Working Papers 2017-17, Faculty of Economic Sciences, University of Warsaw.
    9. Franceschi, Dina & Vásquez, William F., 2011. "Do Supervisors Affect the Valuation of Public Goods?," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 40(2), pages 1-17, August.
    10. Halkos, George, 2012. "The use of contingent valuation in assessing marine and coastal ecosystems’ water quality: A review," MPRA Paper 42183, University Library of Munich, Germany.
    11. Rodgers Makwinja & Ishmael Bobby Mphangwe Kosamu & Chikumbusko Chiziwa Kaonga, 2019. "Determinants and Values of Willingness to Pay for Water Quality Improvement: Insights from Chia Lagoon, Malawi," Sustainability, MDPI, vol. 11(17), pages 1-26, August.
    12. John C. Whitehead & O. Ashton Morgan & William L. Huth, 2018. "Convergent validity of stated preference methods to estimate willingness-to-pay for seafood traceability: The case of Gulf of Mexico oysters," Economics Bulletin, AccessEcon, vol. 38(1), pages 326-335.
    13. Egan, Kevin J. & Corrigan, Jay R. & Dwyer, Daryl F., 2015. "Three reasons to use annual payments in contingent valuation surveys: Convergent validity, discount rates, and mental accounting," Journal of Environmental Economics and Management, Elsevier, vol. 72(C), pages 123-136.
    14. Hazel Bateman & Ralph Stevens & Jennifer Alonso Garcia & Eduard Ponds, 2018. "Learning to Value Annuities: The Role of Information and Engagement," ULB Institutional Repository 2013/300030, ULB -- Universite Libre de Bruxelles.
    15. Sobolewski, Maciej & Kopczewski, Tomasz, 2017. "Estimating demand for fixed-line telecommunication bundles," Telecommunications Policy, Elsevier, vol. 41(4), pages 227-241.
    16. Catherine L. Kling & Daniel J. Phaneuf & Jinhua Zhao, 2012. "From Exxon to BP: Has Some Number Become Better Than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 3-26, Fall.
    17. Mike Christie & Christopher D. Azevedo, 2009. "Testing the Consistency Between Standard Contingent Valuation, Repeated Contingent Valuation and Choice Experiments," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 154-170, February.
    18. Levison S. Chiwaula & Gowokani Chijere Chirwa & Lucy S. Binauli & James Banda & Joseph Nagoli, 2018. "Gender differences in willingness to pay for capital-intensive agricultural technologies: the case of fish solar tent dryers in Malawi," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 6(1), pages 1-15, December.
    19. Kanya, Lucy & Saghera, Sabina & Lewin, Alex & Fox-Rushby, Julia, 2019. "The criterion validity of willingness to pay methods: a systematic review and meta-analysis of the evidence," LSE Research Online Documents on Economics 100741, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Access to tap water; Contingent valuation method; COVID-19; Quality; Willingness to pay;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I10 - Health, Education, and Welfare - - Health - - - General
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:envpol:v:26:y:2024:i:3:d:10.1007_s10018-023-00381-1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.