Water Economics and Policy

This study utilized the contingent valuation method to estimate the value of water-related ecosystem services (ES) in Vietnam, focusing on provisioning and regulating services for addressing water scarcity (WS) in rice farming. By incorporating gender and climate change perceptions, it expanded the existing literature on valuing river ecosystem services. The findings showed a significant number of households experiencing severe water scarcity in the past five years, with over 70% facing occasional or regular WS in the last 12 months. Rice farmers were willing to adopt coping measures and preventive practices to preserve water-related ES, recognizing their importance for sustaining rice cultivation. Farmers demonstrated willingness to contribute financially to restore and maintain water-related ES in rivers and canals. The median willingness to pay for restoration was VND188,300/ha, with estimated values of US$2,898,133 for a 10% affected area and US$23,185,068 for an 80% affected area over five years. Perception of WS severity and associated risk positively influenced households’ decisions to contribute financially. These findings have policy implications and provide insights for effective coping strategies against WS, enhancing water-resilient agriculture in the Lower Mekong Basin.

Water scarcity impedes economic development and can be expensive or infeasible to resolve in many developing countries with recurring water service outages. In such circumstances, water supply organizations may be able to improve ancillary water service attributes to alleviate the burden of service interruptions. We use a discrete choice experiment to estimate households’ willingness to pay (WTP) for improved water quality, coordinated scheduling of planned service interruptions, water use restrictions, and improved dissemination of information about upcoming service interruptions in Puerto Rico. The results indicate that households’ WTP varies considerably across attributes and is greatest ($ 28/month per household) for ensuring adequate water quality. Preferences for water service improvements vary across geographic locations and latent user groups.

This study explores the impact of prior experiences, environmental concern and awareness levels on pro-environmental behavior in the context of mitigation of plastic pollution. Using survey and geo-location data after a tsunami and a monsoon season, this survey employs a latent class analysis through a Generalized Structural Equation Model (GSEM) to identify similarities between groups’ willingness to pay (WTP) to mitigate macroplastic pollution in riverbeds and beaches in Indonesia. Results show that more environmentally-conscious respondents were also more sensitive to the issue of pollution while having observed more plastic pollution also increases support for pollution mitigation. Proximity to polluted waterways also increased WTP, especially to urban participants. Overall, accounting for prior experiences, environmental concern and awareness levels does lead to statistical differences between classes, with those scoring higher in these categories being also more willing to monetarily contribute to mitigate that issue. The use of such an integrated latent class model (LCM) can help with disentangling drivers of preferences, especially in the context of determining levels of support for pollution abatement in a developing country.

In this study, we measure the effect of restoration actions on the economic value of coastal communities. We use a residential sorting model to simulate residential moves between communities and then estimate the value of restoring shoreline uses in coastal communities. Our application measures the effect of cleaning up Great Lakes Areas of Concern (AOC) — which are heavily polluted coastal locations prioritized for restoration in the United States and Canada — on the willingness to pay (WTP) of residents in the U.S. state of Michigan. While prior research documents the effect of individual AOCs on residents, particularly in local housing markets, little research has examined systematically where restoration is occurring and whether it affects mobility at a regional level. The results in this paper suggest that restoration actions can affect mobility, with point estimates indicating households are willing to pay $54/year for the uses restored between 2005 and 2015 in Michigan’s AOCs.

This research uses a time-varying difference-in-differences (DID) model to assess the impact of the water resource fee to tax (WRFT) policy on water pollution in China from 2004 to 2020. The study finds that the WRFT policy can reduce chemical oxygen demand (COD) emissions by 17.7% and ammonia nitrogen (NH₃-N) emissions by 31.6% on average. These findings are supported by various robustness tests, such as the parallel trend test, the placebo test, and the changing standard errors. The study also finds that the impact of the WRFT policy is stronger in regions with higher economic development levels and lower water pollution levels, but does not show heterogeneity in water resource abundance. The mechanism analysis suggests that the WRFT policy achieves the effect of reducing water pollution by reducing sewage discharge, increasing intensity of water pollution prevention, and promoting green R&D innovation. The study addresses potential endogeneity issues such as reverse causality, sample self-selection, and omitting variable bias. Based on these findings, the study offers some policy recommendations to further enhance the WRFT policy effects and reduce water pollution in China.

Could irrigation water pricing be reformed so that the practice of irrigation is less harmful? Answering this question requires insights into how water pricing reform works for different irrigators/crops each with its own price elasticity of irrigation water demand and water supply, and into the political complexity of irrigation water pricing reform. In particular, the full benefits and costs associated with irrigation are an important, but often inadequately understood, element in irrigation water pricing reform. In this paper, these insights are investigated using the theoretical concepts of supply and demand. It is shown that the market cannot provide the full benefits from irrigation and ignores the full costs. It is also shown that the shape of the irrigation water supply and demand schedules, the current equilibrium position and the size of the charge required to get to a socially optimum position all work against irrigation water pricing as a tool that can be used to reduce demand. These concepts can be used to assess the implications of irrigation pricing reform comprehensively, explicitly and consistently, so that the implicit subsidies and externalities become visible.