Essays on the Economics of Drinking Water Quality and Infrastructure

This dissertation consists of three essays that examine consumer behavior with respect to drinking water quality issues. The first essay uses contingent valuation method to explore consumers' willingness to pay (WTP) for a hypothetical material in home drinking water infrastructure that will remain leak free. Willingness to pay is investigated using both dichotomous choice and dichotomous choice with follow-up formats using a national telephone survey of consumers. Our results indicate that consumers' concerns about future system failures and income positively affect their WTP for an improved material while satisfaction with the water quality, education and the bid amount asked negatively affect their WTP for an improved material. There are no significant differences in the determinants of WTP between respondents who have experienced problems with home water infrastructure and respondents who have not. Furthermore, the estimated mean WTP does not change significantly between the dichotomous choice questioning format and the dichotomous choice with follow-up format The second essay investigates the determinants of consumers' willingness to accept improvement programs for three drinking water issues: water quality, pinhole leaks in home plumbing infrastructure and aging public infrastructure. The research is based on a mail survey of consumers in Northern Virginia and the Maryland suburbs of Washington D.C. The analysis focuses on the relationship between information, risk perceptions and willingness to pay. Results indicate that the choice to support any of the programs is negatively affected by the cost of the proposed improvement. Consumers' risk perceptions, the external information provided in the survey and whether they read the annual report from their water utility affect their choices for investment in improvement programs. The third essay examines the effect of risk perceptions about tap water, general risk aversion and consumers' characteristics on their decision to avert drinking water risks and related expenditures. Results are based on the same survey data from the second study. The risk aversion measure is elicited using the sequence of questions employed in the National Panel Study of Income Dynamics. Results indicate that consumers' risk perceptions affect both the decision to avert and the amount spent on averting activities. However, we do not find a significant impact of risk aversion on averting behavior. In addition we find that respondents were more likely to use water treatments if they were unsatisfied with their tap water or had problems or concerns with water odor and particles.

Name thesis:degree_name

Ph. D.

Level thesis:degree_level

doctoral

Discipline thesis:degree_discipline

Agricultural and Applied Economics

Department dc:contributor.department

Agricultural and Applied Economics

Grantor dc:publisher

Virginia Tech

Year dc:date.issued

2011

Author dc:creator

• Tanellari, Eftila

Chair dc:contributor.committeechair

• Bosch, Darrell J.

Committee members dc:contributor.committeemember

• Boyle, Kevin J.
• Mills, Bradford F.
• Parmeter, Christopher F.
• Pease, James W.

• Averting Behavior
• Drinking Water Infrastructure
• Drinking Water Quality
• Willingness-To-Pay

Statement dc:rights

• In Copyright

Licence dc:rights.uri

• http://rightsstatements.org/vocab/InC/1.0/

Dc Identifier Other

etd-05172011-202204

OAI identifier oai:identifier

oai:vtechworks.lib.vt.edu:10919/27769