Metcalfe, Paul J.
(2012)
Non-market valuation using stated preferences: applications in the water sector.
PhD thesis, London School of Economics and Political Science.
Abstract
This thesis is concerned with the application of stated preference methods to non-market
valuation problems. It reviews the literature on the state of the art of the method, and
applies the techniques to three applications in the water sector.
In the first application, estimates are presented of the value to households in
England and Wales of improvements to the quality of water in the natural environment.
The need for value estimates arises from the European Community Water Framework
Directive, which drives water policy across the European Union. Area based values
were generated to maximise the potential for subsequent policy incorporation and value
transfer. These were found to vary from £2,263 to £39,168 per km
2
depending on the
population density around the location of the improvement, the ecological scope of that
improvement, and the value elicitation method employed.
The second application investigates the cost of drought water use restrictions to
households and businesses in London. Estimates of willingness to pay for service
quality increments often play an important role in the decisions of regulators and
regulated companies in industries where consumers have little opportunity to exercise
their preferences for service quality. The estimates presented in this chapter are
particularly applicable to regulatory appraisals of water company investment
expenditure and to planning applications for projects to improve the resilience of urban
water supply systems.
The final application examines the reliability of values measured before an
economic downturn for application during the downturn via analysis of near identical
surveys conducted before, and during, the 2008-2010 economic recession. The main
result is that the economic downturn led to lower willingness to pay when elicited via 5
the payment card contingent valuation method, but had no effect on values elicited via a
dichotomous choice (i.e. referendum-type) contingent valuation question. Potential
explanations for this finding are explored in light of the literature on closed-ended
versus open-ended elicitation method comparisons.
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