Maintaining water service quality in the face of climate change: Can stated-preference analysis support priority setting?

In the search for effective and manageable tools to allow public participation in water management, economic valuation techniques are attracting increasing interest, mainly based on structured surveys to investigate customers’ priorities and willingness to pay. In the literature, these studies usually investigate single dimensions of water quality and rarely compare individual, collective and environmental dimensions. Moreover, they are primarily concerned with investigating improvements over the status quo, while the most relevant issue, at least in developed countries, is whether and how much to spend to prevent future malfunctions due to emerging risks, most notably climate change. Our study contributes to filling this gap. With a choice experiment, we estimate a model to investigate individuals’ preferences concerning future investments in domestic water supply to prevent possible inconveniences due to climate change. The case study area was Friuli Venezia Giulia in Northern Italy, where discussion regarding water safety plans has raised interest among utilities, policymakers and the public. By implementing statistical segmentation of the respondents’ answers (through a latent class method), it was found that the highest willingness to pay (WTP) regards improving ecological quality while improving the quality of drinking water supply receives lower WTP. Surprisingly, respondents do not attach a positive value to actions aimed at increasing resilience and reducing future malfunctions in case of extreme or unpredicted events and seem to prefer moderate restrictions instead of increasing the water bill to fund investments aimed at increasing resilience and reliability. This result contradicts the implicit priorities adopted by water companies and fostered by regulators.