Keywords
willingness to pay
economic efficiency
shortage
contingent valuation
Abstract
Water scarcity is one of the leading causes of social conflict and disease around the world. Estimates of the benefits obtained by projects focused on eradicating water scarcity can be used to evaluate the efficiency of implementing these projects. We use the contingent valuation method to estimate households’ willingness to pay (WTP), in addition to the monthly water rate, for projects aimed at eradicating water scarcity in Puerto Rico. After adjusting the estimates, the results of Logit models suggest that households in the metropolitan region are willing to pay $7.61 / month. In contrast, households in rural areas are willing to pay $4.99 / month for projects aimed at eliminating water scarcity. Additionally, we find that younger and higher-income residents are
more likely to pay for these projects. We did not find conclusive results on the effect of water storage on households’ WTP for these projects.
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