Temporal Dynamics of Willingness to Pay for Alternatives That Increase the Reliability of Water and Wastewater Service
Publication: Journal of Construction Engineering and Management
Volume 145, Issue 7
Abstract
Changes in public perceptions affect infrastructure projects, policies, and revenue streams. As such, utilities should leverage these dynamic perceptions for a variety of reasons, including identifying strategic times to increase operational revenues through rate changes or billing structure, implementing capital projects or management approaches, or integrating new policies. This study focuses on assessing the temporal variations of stated willingness to pay for improved water and wastewater service of residents in 21 shrinking US cities. This classification of cities was selected due to the fiscal constraints placed on utilities because of the reduced number of customers from that which the original system was designed to serve. Furthermore, a consequence of this decline, a high proportion of low-income residents are paying high per-capita costs. Enabling this study are survey data collected in 2013 and 2016. Random-parameter Tobit regression models are used to identify geographic and sociodemographic factors influencing this stated willingness to pay. A likelihood ratio test confirmed a statistically significant shift between the surveys in the residents’ stated willingness to pay. Model results reveal that between the timeframes of the deployed surveys, the influences of geographic (e.g., Michigan, Ohio) and sociodemographic factors (e.g., age, income) changed as well. Utilities may benefit from using the identified parameters to develop strategies (e.g., outreach programs, targeted education, media advertisements, inclusion in planning) to target specific groups. Similarly, using the geographic parameters may also present an opportunity to increase operational revenue due to higher willingness to pay by residents. In general, this study highlights that public perceptions should be periodically investigated to continually identify times of greater public support for various utility efforts under way.
Get full access to this article
View all available purchase options and get full access to this article.
Data Availability Statement
Data generated or analyzed during the study are available from the corresponding author by request. Information about the Journal’s data-sharing policy can be found here: http://ascelibrary.org/doi/10.1061/(ASCE)CO.1943-7862.0001263.
References
217th Legislature. 2016. “Senate, No. 762.” State of New Jersey. Accessed March 3, 2018. https://www.njleg.state.nj.us/2016/Bills/S1000/762_R1.HTM.
Alcubilla, R. G., and J. R. Lund. 2006. “Derived willingness-to-pay for household water use with price and probabilistic supply.” J. Water Resour. Plann. Manage. 132 (6): 424–433. https://doi.org/10.1061/(ASCE)0733-9496(2006)132:6(424).
Associated Press. 2015. How millennials get news: Inside the habits of America’s first digital generation. New York City: Associated Press.
Bakker, T. P., and C. H. de Vreese. 2011. “Good news for the future? Young people, Internet use, and political participation.” Commun. Res. 38 (4): 451–470. https://doi.org/10.1177/0093650210381738.
Banda, B. M., S. Farolfi, and R. M. Hassan. 2007. “Estimating water demand for domestic use in rural South Africa in the absence of price information.” Water Policy 9 (5): 513–528. https://doi.org/10.2166/wp.2007.023.
Beharry-Borg, N., and R. Scarpa. 2010. “Valuing quality changes in Caribbean coastal waters for heterogeneous beach visitors.” Ecol. Econ. 69 (5): 1124–1139. https://doi.org/10.1016/j.ecolecon.2009.12.007.
Behnood, A., A. M. Roshandeh, and F. L. Mannering. 2014. “Latent class analysis of the effects of age, gender, and alcohol consumption on driver-injury severities.” Analytic Methods Accid. Res. 3: 56–91. https://doi.org/10.1016/j.amar.2014.10.001.
Bhat, C. R. 2003. “Simulation estimation of mixed discrete choice models using randomized and scrambled Halton sequences.” Transp. Res. Part B: Methodol. 37 (9): 837–855. https://doi.org/10.1016/S0191-2615(02)00090-5.
Bowker, J. M., D. H. Newman, R. J. Warren, and D. W. Henderson. 2003. “Estimating the economic value of lethal versus nonlethal deer control in suburban communities.” Soc. Nat. Resour. 16 (2): 143–158. https://doi.org/10.1080/08941920309197.
Bowman, N. 2017. “Glades reservoir project not dead.” The Times. Accessed January 1, 2018. https://www.gainesvilletimes.com/news/glades-reservoir-project-not-dead/.
Brody, S. D., S. Zahran, A. Vedlitz, and H. Grover. 2008. “Examining the relationship between physical vulnerability and public perceptions of global climate change in the United States.” Environ. Behav. 40 (1): 72–95. https://doi.org/10.1177/0013916506298800.
Brown, S., W. H. Greene, M. N. Harris, and K. Taylor. 2015. “An inverse hyperbolic sine heteroskedastic latent class panel Tobit model: An application to modelling charitable donations.” Econ. Modell. 50: 228–236. https://doi.org/10.1016/j.econmod.2015.06.018.
Burnham, K. P., and D. R. Anderson. 2004. “Multimodel inference: Understanding AIC and BIC in model selection.” Sociol. Methods Res. 33 (2): 261–304. https://doi.org/10.1177/0049124104268644.
Cho, S., S. T. Yen, J. M. Bowker, and D. H. Newman. 2008. “Modeling willingness to pay for land conservation easements: Treatment of zero and protest bids and application and policy implications.” J. Agric. Appl. Econ. 40 (1): 267–285. https://doi.org/10.1017/S1074070800028108.
CNN (Cable Network News) Library. 2017. “Flint water crisis fast facts.” CNN. Accessed March 3, 2018. https://www.cnn.com/2016/03/04/us/flint-water-crisis-fast-facts/index.html.
Cooper, B., M. Burton, and L. Crase. 2018. “Valuing improvements in urban water security: Evidence of heterogeneity derived from a latent class model for eastern Australia.” Appl. Econ. 50 (31): 3364–3375. https://doi.org/10.1080/00036846.2017.1420896.
DiChristopher, T. 2017. “Nebraska commission approves keystone CL pipeline route.” CNBC. Accessed February 1, 2018. https://www.cnbc.com/2017/11/20/nebraska-commission-approves-keystone-xl-pipeline-route.html.
EPA. 2012. “Clean watersheds needs survey 2012.” Accessed March 3, 2018. https://www.epa.gov/sites/production/files/2015-10/documents/cwns_fs-nj.pdf.
Faust, K. M., D. M. Abraham, and S. P. McElmurry. 2016a. “Sustainability of water and wastewater infrastructure in shrinking cities.” J. Public Works Manage. Policy 21 (2): 128–156. https://doi.org/10.1177/1087724X15606737.
Faust, K. M., D. M. Abraham, and S. P. McElmurry. 2016b. “Water and wastewater infrastructure management in shrinking cities.” Public Works Manage. Policy 21 (2): 128–156. https://doi.org/10.1177/1087724X15606737.
Faust, K. M., D. M. Abraham, and H. Zamenian. 2015. “Statistical modeling of public attitudes towards water infrastructure retooling alternatives in shrinking cities.” In Proc., 5th Int./11th Construction Specialty Conf., 1–10. Montreal: Canadian Society of Civil Engineers.
Faust, K. M., S. Hernandez, and J. Anderson. 2018. “Willingness to pay for perceived increased costs of water and wastewater service in shrinking US cities: A latent class approach.” J. Water Res. Plann. Manage. 144 (7): 04018033. https://doi.org/10.1061/(ASCE)WR.1943-5452.0000946.
FEMA. 2013. “Hurricane Sandy in New Jersey and New York.” FEMA P-942. Accessed March 3, 2018. https://www.fema.gov/media-library-data/1386850803857-025eb299df32c6782fdcbb6f69b35b13/Combined_Sandy_MAT_Report_508post.pdf.
Flyvbjerg, B., M. K. Skamris Holm, and S. L. Buhl. 2004. “What causes cost overrun in transport infrastructure projects?” Transp. Rev. 24 (1): 3–18. https://doi.org/10.1080/0144164032000080494a.
Fonta, W. M., H. E. Ichoku, and J. Kabubo-Mariara. 2010. “The effect of protest zeros on estimates of willingness to pay in healthcare contingent valuation analysis.” Appl. Health Econ. Health Policy 8 (4): 225–237. https://doi.org/10.2165/11530400-000000000-00000.
Fujita, Y., A. Fujii, S. Furukawa, and T. Ogawa. 2005. “Estimation of willingness-to-pay (WTP) for water and sanitation services through contingent valuation method (CVM): A case study in Iquitos City, The Republic of Peru.” JBICI Rev. 11 (Mar): 59–87.
Genius, M., E. Hatzaki, E. M. Kouromichelaki, G. Kouvakis, S. Nikiforaki, and K. P. Tsagarakis. 2008. “Evaluating consumers’ willingness to pay for improved potable water quality and quantity.” Water Resour. Manage. 22 (12): 1825–1834. https://doi.org/10.1007/s11269-008-9255-7.
Gil de Zúñiga, H., N. Jung, and S. Valenzuela. 2012. “Social media use for news and individuals’ social capital, civic engagement and political participation.” J. Comput. Mediated Commu. 17 (3): 319–336.
Giuliani, M. V. 2003. “Theory of attachment and place attachment.” In Psychological theories for environmental issues, 137–165. New York: Ashgate Publishing.
Greene, W. H. 2012. Econometric analysis. New York: Pearson Education.
Hall, D., E. Lobina, and R. D. L. Motte. 2014. “Public resistance to privatisation in water and energy.” Dev. Pract. 15 (3–4): 286–301. https://doi.org/10.1080/09614520500076126.
Halstead, J. M., A. E. Luloff, and T. H. Stevens. 1992. “Protest bidders in contingent valuation.” Northeastern J. Agric. Resour. Econ. 21: 160–169.
Halton, J. 1960. “On the efficiency of certain quasi-random sequences of points in evaluating multi-dimensional integrals.” Numerische Mathematik 2 (1): 84–90. https://doi.org/10.1007/BF01386213.
Hanemann, W. M. 1984. “Welfare evaluations in contingent valuation experiments with discrete responses.” Am. J. Agric. Econ. 66 (3): 332. https://doi.org/10.2307/1240800.
Hensher, D., N. Shore, and K. Train. 2005. “Households’ willingness to pay for water service attributes.” Environ. Resour. Econ. 32 (4): 509–531. https://doi.org/10.1007/s10640-005-7686-7.
Holt, K., A. Shehata, J. Strömbäck, and E. Ljungberg. 2013. “Age and the effects of news media attention and social media use on political interest and participation: Do social media function as leveller?” Eur. J. Commun. 28 (1): 19–34. https://doi.org/10.1177/0267323112465369.
Humphries, A., and R. D. Wilding. 2004. “Long term collaborative business relationships: The impact of trust and C3 behaviour.” J. Marketing Manage. 20 (9–10): 1107–1122. https://doi.org/10.1362/0267257042405240.
Jehl, D. 2003. “As cities move to privatize water, Atlanta steps back.” New York Times. Accessed May 2, 2018. https://www.nytimes.com/2003/02/10/us/as-cities-move-to-privatize-water-atlanta-steps-back.html.
Jordan, L. J., and H. A. Elnagheeb. 1993. “Willingness to pay for improvements in drinking water quality.” Water Resour. Res. 29 (2): 237–245. https://doi.org/10.1029/92WR02420.
Jorgensen, B. S., and G. J. Syme. 2000. “Protest responses and willingness to pay: Attitude toward paying for stormwater pollution abatement.” Ecol. Econ. 33 (2): 251–265. https://doi.org/10.1016/S0921-8009(99)00145-7.
Knetsch, J. L. 1990. “Environmental policy implications of disparities between willingness to pay and compensation demanded measures of values.” J. Environ. Econ. Manage. 18 (3): 227–237. https://doi.org/10.1016/0095-0696(90)90003-H.
Krewski, D., L. Lemyre, M. C. Turner, J. E. C. Lee, C. Dallaire, L. Bouchard, K. Brand, and P. Mercier. 2006. “Public perception of population health risks in Canada: Health hazards and sources of information.” Hum. Ecol. Risk Assess. 12 (4): 626–644. https://doi.org/10.1080/10807030600561832.
Leung, M., J. Yu, and Q. Liang. 2013. “Improving public engagement in construction development projects from a stakeholder’s perspective.” J. Constr. Eng. Manage. 139 (11): 04013019. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000754.
Lewicka, M. 2011. “Place attachment: How far have we come in the last 40 years?” J. Environ. Psychol. 31 (3): 207–230. https://doi.org/10.1016/j.jenvp.2010.10.001.
Lewis, S. E., J. S. Popp, L. A. English, and T. O. Odetola. 2017. “Willingness to pay for Riparian Zones in an Ozark Watershed.” J. Water Resour. Plann. Manage. 143 (5): 04017006. https://doi.org/10.1061/(ASCE)WR.1943-5452.0000740.
Li, X., C. H. Hsu, and L. J. Lawton. 2015. “Understanding residents’ perception changes toward a mega-event through a dual-theory lens.” J. Travel Res. 54 (3): 396–410. https://doi.org/10.1177/0047287513517422.
Lindsey, G. 1994. “Market models, protest bids, and outliers in contingent valuation.” Water Resour. 120 (1): 121–129. https://doi.org/10.1061/(ASCE)0733-9496(1994)120:1(121).
Lorenzoni, I., S. Nicholson-Cole, and L. Whitmarsh. 2007. “Barriers perceived to engaging with climate change among the UK public and their policy implications.” Global Environ. Change 17 (3–4): 445–459. https://doi.org/10.1016/j.gloenvcha.2007.01.004.
Ma, G., L. Gu, and N. Li. 2015. “Scenario based proactive robust optimization for critical chain project scheduling.” J. Constr. Eng. Manage. 141 (10): 04015030. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001003.
Mannering, F. L., V. Shankar, and C. R. Bhat. 2016. “Unobserved heterogeneity and the statistical analysis of highway accident data.” Analytic Methods Accid. Res. 11: 1–16. https://doi.org/10.1016/j.amar.2016.04.001.
Milfont, T. L., L. Evans, C. G. Sibley, J. Ries, and A. Cunningham. 2014. “Proximity to coast is linked to climate change belief.” PLoS ONE 9 (7): e103180. https://doi.org/10.1371/journal.pone.0103180.
Naderpajouh, N., A. Mahdavi, M. Hastak, and D. P. Aldrich. 2014. “Modeling social opposition to infrastructure development.” J. Constr. Eng. Manage. 140 (8): 04014029. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000876.
Njus, E. 2016. “Portland voters approve 4-year gas tax, highest in state.” Oregonlive. Accessed May 2, 2018. https://www.oregonlive.com/politics/2016/05/portland_gas_tax_road_repairs.html.
Ohio EPA. 2014. 2013 sewer and water rate survey. Columbus, OH: Ohio EPA.
Osman, K., and K. Faust. 2017. “Locational and demographic drivers of perceived water conservation efforts in Austin, Texas.” In Proc., Int. Constr. Specialty Conf., 1–10. Montreal: Canadian Society of Civil Engineers.
Pahukula, J., S. Hernandez, and A. Unnikrishnan. 2015. “A time of day analysis of crashes involving large trucks in urban areas.” Accid. Anal. Prev. 75: 155–163. https://doi.org/10.1016/j.aap.2014.11.021.
Pallagst, K. 2009. “Shrinking cities in the United States of America.” In The future of shrinking cities: Problems, patterns and strategies of urban transformation in a global context, 81–88. Los Angeles: Univ. of California.
Pew Research Center. 2018. “Social media fact sheet.” Accessed March 2, 2018. https://www.pewinternet.org/fact-sheet/social-media/.
Qualtrics. 2016. “Dataset.” Accessed March 3, 2018. https://www.qualtrics.com/.
Rollins, K., O. Zachariah, J. Frehs, and D. Tate. 1997. “Resource valuation and public policy: Consumers’ willingness to pay for improving water servicing infrastructure.” Can. Water Resour. J. 22 (2): 185–195.
Sackett, H., and D. Botterill. 2006. “Perceptions of international travel risk: An exploratory study of the influence of proximity to terrorist attack.” E-Rev. Tourism Res. 4 (2): 44–49.
Satija, N. 2014. “Ohio’s water crisis is a warning to all states.” Texas Tribune. Accessed January 1, 2018. https://www.washingtonpost.com/blogs/govbeat/wp/2014/08/04/ohios-water-crisis-is-a-warning-to-all-states/?utm_term=.c6a305051058.
Schwirtz, M. 2013. “Report cites large release of sewage from Hurricane Sandy.” New York Times. Accessed January 1, 2018. https://www.nytimes.com/2013/05/01/nyregion/hurricane-sandy-sent-billions-of-gallons-of-sewage-into-waterways.html.
Semega, J. L., K. R. Fontenot, and M. A. Kollar. 2017. Income and poverty in the United States: 2016. Washington, DC: US Census Bureau.
Slack, P. T., B. Johnson, and D. Aunkst. 2003. “Financing water infrastructure improvements in Pennsylvania.” In Proc., World Water and Environmental Resource Congress, 1–10. Reston, VA: ASCE.
Strazzera, E., M. Genius, R. Scarpa, and G. Hutchinson. 2003. “The effect of protest votes on the estimates of WTP for use values of recreational sites.” Environ. Resour. Econ. 25 (4): 461–476. https://doi.org/10.1023/A:1025098431440.
Sudman, S., R. C. Mitchell, and R. T. Carson. 1989. Using surveys to value public goods: The contingent valuation method. Washington, DC: Resources for the Future.
Taylor, T. R. B., D. N. Ford, and K. F. Reinschmidt. 2012. “Impact of public policy and societal risk perception on US civilian nuclear power plant construction.” J. Constr. Eng. Manage. 138 (8): 972–981. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000516.
Tentes, G., and D. Damigos. 2015. “Discrete choice experiment for groundwater valuation: Case of the Asopos River Basin, Greece.” J. Water Resour. Plann. Manage. 141 (7): 04014089. https://doi.org/10.1061/(ASCE)WR.1943-5452.0000481.
Tobin, J. 1958. “Estimation of relationships for limited dependent variables.” Econometrica 26 (1): 24–36. https://doi.org/10.2307/1907382.
Train, K. 2000. “Halton sequences for mixed logit.” Accessed March 2, 2018. https://cloudfront.escholarship.org/dist/prd/content/qt6zs694tp/qt6zs694tp.pdf.
US Census Bureau. 2016. “S1701: Poverty status in the past 12 months.” Accessed March 3, 2018. https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk.
Valentin, V., and S. M. Bogus. 2012. “Public opinion as an indicator of social sustainability of construction projects.” In Proc., ICSDEC 2012: Developing the Frontier of Sustainable Design, Engineering, and Construction, 651–568. Reston, VA: ASCE.
Veronesi, M., F. Chawla, M. Maurer, and J. Lienert. 2014. “Climate change and the willingness to pay to reduce ecological and health risks from wastewater flooding in urban centers and the environment.” Ecol. Econ. 98: 1–10. https://doi.org/10.1016/j.ecolecon.2013.12.005.
Washington, S. P., M. G. Karlaftis, and F. Mannering. 2010. Statistical and econometric methods for transportation data analysis. London: Chapman & Hall.
Waxmann, L. 2015. “Community opposition Halts Bryant St. Development.” San Francisco Public Press. Accessed January 1, 2018. https://missionlocal.org/2015/09/community-opposition-halts-bryant-st-development/.
West, J., I. Bailey, and M. Winter. 2010. “Renewable energy policy and public perceptions of renewable energy: A cultural theory approach.” Energy Policy 38 (10): 5739–5748. https://doi.org/10.1016/j.enpol.2010.05.024.
Whittington, D., J. Briscoe, X. Mu, and W. Barron. 1990. “Estimating the willingness to pay for water services in developing countries: A case study of the use of contingent valuation surveys in Southern Haiti.” Econ. Dev. Cult. Change 38 (2): 293–311. https://doi.org/10.1086/451794.
Yu, X., and D. Abler. 2010. “Incorporating zero and missing responses into CVM with open-ended bidding: Willingness to pay for blue skies in Beijing.” Environ. Dev. Econ. 15 (5): 535–556. https://doi.org/10.1017/S1355770X10000197.
Zielinski-Gutierrez, E. C., and M. H. Hayden. 2006. “A model for defining West Nile Virus risk perception based on ecology and proximity.” EcoHealth 3 (1): 28–34. https://doi.org/10.1007/s10393-005-0001-9.
Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 145 • Issue 7 • July 2019
Copyright
©2019 American Society of Civil Engineers.
History
Received: May 11, 2018
Accepted: Dec 11, 2018
Published online: May 9, 2019
Published in print: Jul 1, 2019
Discussion open until: Oct 9, 2019
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.