The Value of Regional Water Quality Improvements

32 Pages Posted: 29 Oct 2004

See all articles by W. Kip Viscusi

W. Kip Viscusi

Vanderbilt University - Law School; National Bureau of Economic Research (NBER); Vanderbilt University - Department of Economics; Vanderbilt University - Owen Graduate School of Management; Vanderbilt University - Strategy and Business Economics

Joel C. Huber

Duke University - Fuqua School of Business

Jason Bell

Duke University - Fuqua School of Business

Date Written: June 2004

Abstract

Four years ago, Magat, Huber, Viscusi, and Bell (2000) reported pretest results that introduced an iterative choice approach to valuing water quality improvements. This paper applies this approach to a nationally representative sample of over 1,000 respondents. We find that the method provides stable, policy relevant estimates of the amount people are willing to pay for improvements. Willingness to pay for a one percentage point improvement in water quality has a mean value of $23.17 with a median of $15, and appropriately increases with family income, age, education, and the likelihood of using lakes or rivers. In addition, the method passes an external scope test demonstrating that greater gains in the percent of water rated "good" increase the likelihood that the respondent will choose the alternative with better water quality. We tested the appropriateness of a national web-based panel of respondents and find that the Knowledge Networks sample does not fall prey to difficulties that could plague such panels. First, the sampled web-based panel matches United States demographics very well, and predictors of sample responsiveness, such as the likelihood to take a long time to respond to the survey, have minimal impact on the critical estimates of the value of good water. Second, the results are quite insensitive to doubly censored regression that accounts for the portion of respondents who indicated an unboundedly high or low estimate for the value of cleaner lakes and rivers. Finally, the stability of the benefit values is further demonstrated by the selection-corrected estimates that adjust for people invited to participate but who did not successfully complete the survey.

Keywords: water quality, environmental benefits, survey, contingent valuation

JEL Classification: Q25, K32

Suggested Citation

Viscusi, W. Kip and Huber, Joel C. and Bell, Jason, The Value of Regional Water Quality Improvements (June 2004). Available at SSRN: https://ssrn.com/abstract=611885 or http://dx.doi.org/10.2139/ssrn.611885

W. Kip Viscusi (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States
615-343-7715 (Phone)
615-322-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Vanderbilt University - Department of Economics

Box 1819 Station B
Nashville, TN 37235
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Owen Graduate School of Management

401 21st Avenue South
Nashville, TN 37203
United States
(615) 343-7715 (Phone)
(615) 343-5953 (Fax)

HOME PAGE: http://law.vanderbilt.edu/faculty/viscusi.htm

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States

Joel C. Huber

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7785 (Phone)

Jason Bell

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

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