Public preferences and willingness to pay for different groundwater threshold values A majority of 96 percent of the total sample population believes that improving the quality of

groundwater in their region is important or very important. Less than one percent believes that groundwater quality improvement is not important, while 3 percent considers groundwater protection somewhat important. When respondents are asked to indicate which groundwater quality level they prefer (see section 11.2), preferences appear to be highest for drinking water or ‘good’ quality (64%), followed by natural background or ‘very good’ groundwater quality (29%) (see Figure 28).¹²

0 10 20 30 40 50 60 70

NBL (< 25 mg NO3/l) DWQ (< 50 mg NO3/l) IQ (< 75 mg NO3/l)

%

Explanatory note: NBL: natural background quality; DWQ: drinking water quality; IQ: irrigation water quality Figure 28: Public preferences for different groundwater quality classes

Half of the sample population has no difficulty assessing what these groundwater quality classes mean for them personally. A quarter (27%) finds it somewhat difficult to assess what it means exactly, while 17 percent really struggles to interpret and translate the classes to their own situation.

A majority of 71 percent of the sample population is willing to pay in principle for improving groundwater quality to their most preferred level. Of those who indicate not to be willing to pay, a third states limited or insufficient income resources as their main reason (Table 20).

Over twenty percent considers the current situation good enough. Ten percent does not want to pay extra, because they feel they already pay enough. Closely related to this, 5 percent is

12 Twenty-four respondents did not indicate a preferred quality level and were excluded from further analysis.

not willing to pay extra and state that the protection of groundwater quality should be paid from existing funds or that current tax money should be reallocated towards further groundwater protection.

Protest bidders typically object against the imposed market structure in a CV study (Jorgensen et al., 1999; Meyerhoff and Liebe, 2006). The protest rate is considered an important indicator of the validity of the WTP results (Brouwer, 2000). However, no consensus exists in the international literature about the exact definition of a protest bidder. There often exists a grey area where there is doubt about the true underlying reasons for WTP refusals. In this study, we define protest bidders as respondents who claim that the polluter should pay (and hence do not see themself as a polluter) and respondents who claim that groundwater protection is a government responsibility. In total 15 percent protests against the WTP question, primarily because they believe the polluter should pay. Relating this percentage to the total number of respondents (n=518), a protest rate results of less than 5 percent. This is considered very low and attributed to the fact that the questionnaire was thoroughly pre-tested.

Reason why respondents are not willing to pay % Economic-theoretic expected reasons (zero bids)

Income too low 33.6

Current situation good enough 22.1

Other things more important 5.4

Prefers to buy bottled water instead 2.7 Other ad hoc reasons (zero bids)

I already pay (enough), I don’t want to pay extra 10.1 Pay from/reallocation existing tax money 5.4

Other reasons 5.4

Protest reasons (excluded from further analysis)

Polluter should pay 12.1

Government task/responsibility 2.7

Total 100.0

Table 20: Reasons why respondents are not willing to pay

When asked for the most important reason for willing to pay to reach their most preferred groundwater quality level, a majority of more than 60 percent attaches equal weight to their own health (roughly interpreted as use value) and the environment (roughly interpreted as non-use value). Respondents were asked to rate the most important reason why they are willing to pay for groundwater protection and their most preferred groundwater quality level according to the following semi-itemized rating scale:

The introduced groundwater quality levels (see section 11.2) refer explicitly but not

exclusively to different use and non-use considerations. We pre-tested this, but also test this here once again with the help of the rating scale above. As expected, those respondents who prefer drinking water quality attach significantly more value to their own health than

respondents who prefer a natural situation with natural background levels, suggesting that the implied use and non-use distinction in the applied groundwater quality ‘ladder’ is reflected in underlying respondent motivation to choose between different quality levels¹³.

Some evidence of ‘warm glow’ (e.g. Kahneman and Knetsch, 1992; Nunes and Schokkaert, 2003) is found in the case study. Respondents are asked explicitly which share of their stated WTP they would be equally willing to contribute to another good cause of their own choice.

Figure 29 shows the responses. Sixty-two percent wants to pay specifically for their most preferred groundwater quality level and not to any other good cause or charity. However, if given the opportunity to choose, almost 20 percent equally prefers to pay a part of their stated WTP for groundwater protection to another good cause of their own choice. Ten percent is indifferent between spending their entire WTP for groundwater protection or another good cause.

13 The average rating score equals +0.11 (standard error 0.23) for respondents who prefer natural background levels and equals –0.38 for respondents who prefer drinking water quality (standard error 0.16). The outcome of the non-parametric Mann-Whitney test statistic testing the null hypothesis of equal rating scores is rejected convincingly at the 2 percent level (MW-Z = –2.387 (p<0.017)).

0 10 20 30 40 50 60 70

0% 25% 50% 75% 100%

%

Figure 29: Share of the stated WTP amount that people are equally willing to pay for another good cause.

Average WTP for the different groundwater quality levels is presented in Table 21.¹⁴ These amounts have been corrected for the shares that people would like to give to any good cause, as presented above. Corresponding with a-priori expectations we find significant sensitivity to scope in the WTP results. This requires that WTP should vary appropriately as the size of the good under consideration changes (Bateman and Brouwer, 2006). Put very simply, as the provision change increases so should WTP, i.e. the higher groundwater quality, the higher expected average WTP. This applies to both the mean and median WTP values presented in table 21¹⁵.

14 Thirty-seven respondents who indicated that they are willing to pay in principle to reach their most preferred groundwater quality level (10%) were unable to decide on the exact amount and are therefore not included in the results presented here.

15 The outcome of the Kruskal-Wallis chi-square test statistic (testing differences between irrigation, drinking water and natural background quality) is 10.681 (p<0.01). A similar result is found when applying the median test. The outcome of the Mann-Whitney Z-value is –2.823 (p<0.01) when testing the difference between WTP for natural background levels and WTP for drinking water quality. The difference between drinking water quality and irrigation water quality is statistically not significant at the 10 percent level (MW Z=-1.142 (p<0.25)), because of the low number of observations and the relatively high variation coefficient for irrigation water quality.

Initially most preferred groundwater quality level

Follow-up if most preferred is IQ or DWQ Irrigation

Explanatory note: IQ: irrigation water quality; DWQ: drinking water quality

Table 21: Average WTP (€/household/year) to improve groundwater quality to the desired level

Mean WTP is just over 45 euro per household per year in the case of drinking water quality (‘good status’) and 27 euro higher (72 euro/household/year) in the case of respondents who chose natural background levels (‘very good status’) as their most preferred groundwater quality level. This difference is exactly the same as the incremental WTP presented in the last column of Table 21 for those respondents who initially chose irrigation or drinking water quality as their most preferred quality level and were then asked for their additional WTP for natural background levels. The number of observations for irrigation water quality is too low to be able to derive any meaningful conclusions.

Finally, respondents are also asked how certain they are that they will actually pay the specific money amount they crossed on the payment card (using a scale ranging from 0 to 100%), and which money amount they are 99 percent certain they will pay. The results are presented in Figure 30. No significant differences can be detected between respondents who prefer drinking water quality and respondents who prefer a situation with natural background levels¹⁶. Between 42 and 47 percent is 100 percent certain they will pay their originally stated WTP amount, the rest is not 100% certain. A quarter is 50 percent or less certain, and 30 percent more than 50 percent certain, but less than 100 percent.

16 The outcome of the Mann-Whitney Z=-0.554 (p<0.6).

0

Figure 30: Distribution of certainty surrounding stated WTP for different groundwater quality classes

Investigating average WTP where respondents are 99 percent certain that they will really pay this amount of money, we find a slightly lower mean WTP for drinking water quality and a slightly higher mean WTP for natural background levels (Table 22). However, these differences are statistically not significant at the 10 percent level¹⁷.

Groundwater quality level

Table 22: Average WTP (€/household/year) to improve groundwater quality to the desired level with 99 percent certainty

17 The outcome of the MW Z= -0.653 (p<0.55) in the case of drinking water quality and the MW Z= -0.358 (p<0.72) in the case of natural background levels.

11.7. Factors determining public willingness to pay for different groundwater threshold values