Willingness to Pay for Wastewater Services

To the extent that wastewater management provides valuable services to those who either generate waste or have an interest in the quality of receiving waters, those individuals must have a willingness to pay for these services. Willingness to pay is defined as the maximum amount that would be paid for the level of service received rather than forego it altogether (all or nothing). Those who pay user charges demonstrate, by doing so, that their willingness to pay is at least as great as the charge paid. In fact, it may be much greater: the user charge merely establishes the lower bound. Estimates of willingness to pay can be performed by various indirect methods, such as econometric demand analysis (for those who pay user charges) or contingent valuation studies (for those who benefit from improved water quality).

Such studies are seldom done for wastewater systems but are potentially important. The results would indicate which groups receive benefits from improved wastewater management and what the approximate magnitude of those benefits may be. These results would also be useful in predicting public acceptance of new financing burdens, especially where large increases in financing requirements are expected. This information could be used to tailor financing strategies to the temporal and spatial distribution of anticipated benefits, thus minimizing the chances of placing unjustified burdens on any sector of the population.

REFERENCES

Bernstein, J.D. 1991. Alternative Approaches to Pollution Control and Waste Management: Regulatory and Economic Instruments, draft report. Washington, D.C.: UNDP/World Bank/UNCHS Urban Management and Environment Program.

Boland, J.J. 1989. Environmental Control Through Economic Incentive: A Survey of Recent Experience. Presented at the Prince Bertil Symposium on Economic Instruments in Environmental Control, Stockholm School of Economics, Stockholm, Sweden, June 12-14.

Bureau of the Census. 1991. Statistical Abstract of the United States, 1991. 111th Edition. Washington, D.C.: U.S. Bureau of the Census.


EPA (U.S. Environmental Protection Agency). 1990. Reducing Risk: Setting Priorities and Strategies for Environmental Protection. SAB-EC-90-021. Washington, D.C.: U.S. Environmental Protection Agency, Science Advisory Board.

EPA (U.S. Environmental Protection Agency). 1991. Economic Incentives: Options for Environmental Protection. Report of the U.S. Environmental Protection Agency Economic Incentives Task Force, March 1991.

Ernst and Young. 1990. 1990 National Water and Wastewater Rate Survey, Ernst & Young's National Environmental Consulting Group.


Federal Register. 1989. September 8. 54(173):37370-37373.

Federal Register. 1990. November 16. 55(222):47990.


OECD (Organization for Economic Co-Operation and Development). 1989. Economic Instruments for Environmental Protection. Paris, France: OECD.


PSWQA (Puget Sound Water Quality Authority). 1984. Annual Report. Olympia, Washington: Puget Sound Water Quality Authority.



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