Intertemporal Preferences of Potable Water Supply Consumers
Publication: Journal of Water Resources Planning and Management
Volume 145, Issue 5
Abstract
This research explores potable water consumers’ willingness to pay to fund up-front investments in their potable water supply services (PWSSs), which will reduce rates in the longer term. An online survey of 1,970 New Zealand PWSS consumers was carried out in 2011 to identify factors that influence individual discount rates (IDRs) related to PWSS investments—a first of its kind—using dichotomous choice questions. Constrained latent class models (LCMs)—an established technique—were used to test the presence of a class of respondents that is unwilling to invest—a phenomenon that has not yet been tested for PWSS consumers. Confirming PWSS consumers’ IDRs will help water suppliers understand the factors more conducive to consumer support of long-term PWSS investments. The research showed that consumers have an 82% chance of having high discount rates of 45%–55%, and an 18% chance of always being likely to support initial payment increases in the interest of future savings. Decision makers should be aware of high IDRs, but they should recognize that there is a class of consumers that strongly supports long-term investments.
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Acknowledgments
The authors are thankful to Magnus Söderberg and Penny Burns for their contribution to this paper. Funding for this research was provided by the University of South Australia, Opus International Consultants, and Engineers Canada/TD Meloche Monnex.
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Published In
Journal of Water Resources Planning and Management
Volume 145 • Issue 5 • May 2019
Copyright
©2019 American Society of Civil Engineers.
History
Received: Mar 8, 2018
Accepted: Oct 10, 2018
Published online: Feb 23, 2019
Published in print: May 1, 2019
Discussion open until: Jul 23, 2019
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