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Willingness to Pay for Gray and Green Interventions to Augment Water Supply: A Case Study in Rural Costa Rica

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Abstract

Many rural communities in developing countries experience severe water shortages, limiting their capacity for self-sustainability. This study used contingent valuation and choice experiment methods and in-person interviews to estimate household willingness to pay (WTP) for gray and green interventions to augment water supply in rural Costa Rica. In particular, we examined residents’ preferences for well construction, as a form of gray intervention, and reforestation, as a form of green intervention, aimed at alleviating water shortages. Household WTP to reduce annual water shortage by one day varied between $0.85 (95% CI = 0.77–0.94) and $1.32 (95% CI = 1.08–2.56) per month depending on the project. The results also indicated that households were willing to pay $2.28 (95% CI = 1.36–3.21) and $3.51 (95% CI = 2.57–4.44) per month to increase forest cover in the watershed by 140–180 and 300–340 ha, respectively, assuming no additional water provision from the reforestation project. Nonwater-related benefits comprised 25–34% of the WTP for green intervention, depending on the acreage scenario. We also observed that, even without the nonwater-related ecosystem service benefits associated with reforestation, the value of water from green intervention exceeded the corresponding value of water from gray intervention. The disparity between preferences for water obtained from gray and green intervention may be due to differences in corresponding timing, uncertainty, quality of additional water made available from the considered projects, and differences in value elicitation methods.

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Notes

  1. We use the term reforestation to refer to increases in native forest cover on deforested land at the watershed scale.

  2. Water scarcity is measured in terms of annual number of interruptions to water service due to low water levels.

  3. The currency exchange rate was 1 USD = 537 colones (₡) at the time of the survey.

  4. All households within ASADAS experience about the same level of water scarcity as interruptions affect all households equally.

  5. A similar strategy for representing choice attributes as continuous or categorical across different model specifications can be found in Glenk and Colombo (2011).

  6. The ML model was estimated with random parameters for all variables, except for the cost using 500 Halton draws. It is a common practice to hold the cost coefficient fixed to facilitate the estimation of marginal WTP for the attributes in ML models (Train 2009; Wielgus et al. 2009). Econometrics of ML models are discussed by Train (2009).

  7. The remaining 155 respondents filled out CEs that included attributes and choices not relevant for this study and are part of a separate investigation.

  8. One day of water shortage is equivalent to twenty-four cumulative hours of water service interruption. For instance, 24 h of water shortage within a 72-h (3 days) window is equivalent to one day of water shortage.

  9. While the scope of this study excludes a detailed examination of the relationship between forest cover and water provision, we use this preliminary evidence as a motivation for examining WTP for reforestation aimed at improving water provision. We encourage more detailed and careful future examination of the relationship between forest cover and water provision by experts in the biophysical scientific fields.

  10. Similar to the CV analysis, we also estimated a model that explores the effects of water scarcity and community-specific factors on the respondent’s choices using ASADAS-specific fixed effects. In this model, water scarcity and water supply district-specific factors were statistically insignificant, except for one district. We found no differences in WTP estimates between the model that includes water scarcity and ASADAS binary variables and the model that does not. Therefore, Table 6 reports the results from the models that exclude ASADAS binary variables.

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Acknowledgements

We are grateful to presidents of local water distribution associations and residents of the region for their participation in this study. We are also grateful to the officials at the regional office of the National System of Conservation Areas in Hojancha for their support.

Funding

This work was supported by the NSF-IGERT Grant # 0903479 and the USAID Borlaug Fellowship in Food Security Grant # A1102.2. Partial support was provided by USDA-NIFA Hatch Grant # WVA00691.

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Appendices

Appendix A1: example of the CV question

The ASADA where you live on average has 240 h (the equivalent of 10 days) of water scarcity per year. Suppose that the government or the municipality of your county is willing to construct a well to increase the amount of water for household uses by 168 (the equivalent of 7 days) during the dry season. Wells generate water immediately, but some wells in the past have gone dry after several years of service. If the well is constructed, the households will face an increase in the monthly payment. Given the costs, the well will be constructed only if a sufficient number of households are willing to pay the rate. All households benefiting from this well in the region will pay the same rate.

The project implementation will cost you [amount in colons] monthly for as long as the service is provided. Would you support such project and be willing to pay the above amount for well construction?

Yes _____ No _____

Appendix A2: example of the CE exercise

The ASADA where you live on average has 240 h (the equivalent of 10 days) of water scarcity per year. Suppose that reforestation in the watershed is under consideration for alleviating water scarcity during dry seasons. This project will increase forest cover in the ASADA and/or its surrounding areas in the watershed (see the map at the end of the survey). The location of the project has not been finalized at this point. With the exception of residential areas, all lands are eligible for reforestation. In addition to water provision, the forest provides other benefits, including protection of biodiversity, carbon sequestration, and scenic beauty. However, there may be a significant delay in water provision after reforestation. Additional water may become available only after a few years.

Which option would you choose?

 

Option A

Option B

Option C

Native forest cover in the watershed surrounding the ASADA

Between 140 and 180 ha more than the current situation

Between 300 and 340 ha more than the current situation

Same as today

Water availability

72 h more than the current situation (the equivalent of 3 days)

144 h more than the current situation (the equivalent of 6 days)

Same as today

Cost per month

₡2000

₡3000

₡0

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Tavárez, H., Elbakidze, L., Abelleira-Martínez, O.J. et al. Willingness to Pay for Gray and Green Interventions to Augment Water Supply: A Case Study in Rural Costa Rica. Environmental Management 69, 636–651 (2022). https://doi.org/10.1007/s00267-021-01476-9

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