New Horizons in Environmental Economics series
Chapter 7: Consumer Preferences and Public Policy
7.1 INTRODUCTION This chapter aims to examine some issues in relation to household preferences for diﬀerent attributes of water supply.1 With regard to the framework discussed in Chapter 1, the exploration here focuses mainly on path 1–2. Should water-supply planners in cities worry about consumer preferences? Is it necessary to consult with the consumers? Aren’t policy priorities blindingly obvious? Just bring more water to such cities, provide connections to those who can aﬀord it, provide water by standpipes for the poor and everyone will beneﬁt.2 Investments to improve water supply can take a number of routes. For example, spending may be targeted to increase the quantity of water; or while the quantity is maintained at the same level, investments may be made to improve the quality of water; or the consumer may be required to use rain-water harvesting and other conservation techniques; and so on. Hence, from the water planner’s point of view, there may be some merit in knowing consumer preferences for the various attributes and whether consumers are willing to consider changes in one attribute by compensating increases or decreases in other attributes. Consumers can be consulted in a number of ways and one such approach is to use a survey.3 Against this background, this chapter reports an exploration into the use of choice models with an empirical study based on a survey of respondents in Chennai. It aims to explore consumer preferences for various attributes of water supply, whether such preferences are ordered,...
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