Joint Production and Averting Expenditure Measures of Willingness to Pay: Do Water Expenditures Really Measure Avoidance Costs?

11 Pages Posted: 24 Mar 2020

Multiple version iconThere are 2 versions of this paper

Date Written: May 2000

Abstract

A multinomial selection model of averting behavior in response to water contamination risks is estimatedfor Georgia residents. Measures of non‐health related water quality (taste, odor, and appearance) are incorporated into the model to account for joint production of utility and health. The model examines the choice between bottled, filtered tap, and unfiltered tap water. Results of the estimation indicated that perceived risk from tap water, concern about water quality (taste, odor, and appearance of tap water), race, and age are the most important determinants of bottled water selection. Information regarding current or prior problems with tap water, perceived risk from tap water, and income are the most important determinants of water filter selection. Adjusting for quality differences between tap and bottled water, we show that averting costs estimates using bottled water expenditures would lead to an overstatement of avoidance costs by about 12%.

Keywords: averting behavior, bottled water, water quality, D120, Q250

Suggested Citation

Abrahams, Nii Adote and Hubbell, Bryan J. and Jordan, Jeffrey L., Joint Production and Averting Expenditure Measures of Willingness to Pay: Do Water Expenditures Really Measure Avoidance Costs? (May 2000). American Journal of Agricultural Economics, Vol. 82, Issue 2, pp. 427-437, 2000, Available at SSRN: https://ssrn.com/abstract=3557455 or http://dx.doi.org/10.1111/0002-9092.00036

Nii Adote Abrahams (Contact Author)

Missouri State University ( email )

3950 E Newman Rd
Joplin, MO 64801-1595
United States

Bryan J. Hubbell

U.S. EPA ( email )

MD504-02
RTP, NC 27711
United States
919-541-0621 (Phone)
919-541-0839 (Fax)

Jeffrey L. Jordan

University of Georgia

Athens, GA 30602-6254
United States

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