Households' preferences to avoid disturbances in municipal drinking water supply: A nationwide contingent valuation study in Sweden

Abstract

Contingent valuation is applied to study Swedish households’ preferences to avoid experiencing adverse consequences caused by outages and restrictions in the municipal drinking water supply. There is an international need for increased knowledge of such preferences; the frequency of drinking water supply disturbances is increasing globally due to, e.g. climate change and deteriorating water supply infrastructure, calling for preventive measures. Using a nationally representative sample, we estimate the willingness to pay (WTP) for investments that would help avoid a one-time occurrence of three situations: (A) a total outage of tap water delivery; (B) tap water must be boiled to be fit for drinking; and (C) restrictions against particular uses of tap water. Three different duration times for each situation are considered. Mean WTP estimates are robust to the estimation method choice – parametric or non-parametric – but show scope insensitivity for the longest duration times of situations A and B, and all duration times of situation C. Household income has an expected positive and significant effect on the WTP for all situations, and a test of budget sequence sensitivity does not indicate overestimation of adding up WTP estimates for two or three situations. Implications for decision-makers are discussed, including efficiency and equity trade-offs, and the use of the WTP estimates in cost-benefit analyses of investments to avoid situations like those studied.