Modelling Water Security Choices in the Face
of Increasing Water Scarcity in South Europe
and Tests of Transferability
Martín-Ortega, Brouwer
Pulido, Raggi, Viaggi, Álvarez-Farizo,
Skourtos, Kontogianni, Andreu, Berbel,
Sardonini, Ronchi, Machleras and LopezNicolas
EARE Water Pre-Conference
Amsterdam 24th June 2009
Outline





Background
Objectives
Study Design & Choice Model
First Results
Conclusions
Background
6th EU FP AquaMoney Project:



Guidelines for the estimation of WFD’s
environmental & resource costs and benefits
Approach: value of the improvement from
current and good ecological status of water
bodies
Focus: the opportunities foregone of not
reaching the WFD objectives under scarcity
conditions (resource quantity)
Background
Objetives

To assess the costs (or benefits foregone) of
water use under scarcity conditions

Specifically, to estimate the economic value of:


Environmental use of water, i.e. allocating water
to the environment to ensure good environmental
status under conditions of limited water
availability

Water availability for households, i.e. reduction of
the probability of water restrictions (water
security)
To test the transferability of the estimated
values across 4 Mediterranean RB: common
valuation design
Case Studies
Approach

Stated preferences technique (choice
experiment) for non-market values

Repondents were offered the possibility
to pay to ensure:


Water flow in the RB
Household supply
Survey design: attributes
ATTRIBUTES
Probability of water restrictions in households:




Measured through “number of years with water restrictions in the
next 10 years”
Water for drinking and hygiene guaranteed
Baseline: restrictions in 4 years in the next 10
RB environmental quality due to water flow level



Defined as the deviation from natural conditions in relation to a
set of environmental features (based on WFD levels- Annex V)
Baseline: bad status (great deviation from natural conditions)
Monetary attribute (6 levels): annual increase on
water bill during the next 10 years
Survey Design: attributes
Example of choice card
Which option do you prefer?
Questionnaire Structure

Part 1: Individual’s relationship / perception and
concern in relation to water and the environment

Part 2: Valuation:





Status quo monitoring questions
Credibility / familiarity
Choice Experiment: 3 alternatives (A, B and status quo)
, 4 choice occasions, 6 versions
Follow-up protests identification
Part 3: Socio-demographics
Survey administration & sampling strategy
RB
Sample
size
Survey mode
Survey period
(2008)
Italy – Po
241
Face to face
Sept
Greece – Lesbos
312
Face to face
July
Spain – Serpis
394
Face to face
July
Spain - Guadal
354
Face to face
August – Sept
Ramdom sample by quotas of sex and age
in urban/rural municipalities
Cross-sections of RBs population
Choice Model

Multinominal Logit Model

Hausman test for IIA violation,
significant in all cases

Random Parameter Logit Model
Results (I): Perceptions
All countries
Greece
Italy
Spain -S
Spain-G
92.15
93.4
94.3
61.7
84.1
74.36
91.0
Environment is (very) important (%)
94.3
97.4
Water availability is a (big) problem in region (%)
57.5
50.2
21.7
Environment is affected by water scarcity (%)
80.8
92.0
61.57
Has suffered restrictions in 1 or more years in last 10 (%)
39
47.8
29
18.5
62.5
Thinks his/her household will suffer water restrictions in the future (%)
51.4
58.4
47.93
37.8
63.3
Marginal WTP: Only attribute models
€ /household per year
€ per year per hh
Greece
Italy
Spain-S
Spain-G
248.0
165.5
303.2
36.4
92.0
19.6
64.0
45.7
183.2
72.9
103.4
48.4
Results (III): Multivariate Analysis
Spain –S Spain -Gua
Greece
Italy
ASC
-
+
-
+
Prob Domestic Supply
Restrictions
-
-
-
-
Env Quality Good
+
+
+
+
Env Quality Very Good
+
Ns*
+
Ns*
Cost
-
-
-
-
Experienced past
restrictions * Domestic
Supply Restrictions
-
-
-
Ns
Environment priority in
allocation * Env Very Good
+
+
+
Ns
Expectations future water
scarcity
+
+
+
+
Income
+
+
+
+
*Income * Env very Good
Rsquare
+
0.33
0.13
+
0.18
0.18
Results (IV): Policy Scenarios
Scenario
A
1 year out of 10
Status Quo (poor)
B
SQ (4 years out of 10)
Environ. Quality Good
C
SQ (4 years out of 10)
Environ. Quality Very good
D
1 year out of 10
Environ. Quality Very good
Results (IV): Policy Scenarios
€ /household per year
GREECE
Consumer
Surplus
ITALY
Consumer
Surplus
SPAIN-S
Consumer
Surplus
SPAIN-GU
Consumer
Surplus
A
244.4
56.5
141.6
47.9
B
288.5
34.2
101.7
49.9
C
348.5
41.8
122.3
52.7
D
406.6
80.5
216.8
58.8
Transferability test:
Swait-Louviere (1993) procedure
Step 1: H0: βi = βj
(controlling for differences in scale parameter)

- If H0 is rejected: models not the same (stop test)
- If H0 cannot be rejected: go to step 2

Step 2: H0: λi = λj
- If H0 is rejected
→ transfer problematic
- If H0 cannot be rejected → transferable models
Transferability test:
Swait-Louviere (1993) procedure
Case study
LL(i)
LL(j)
LL(ij)
LR-test (3df)
βi = βj?
Greece-Italy
-989.1
-973.5
-1984.1
43.1
NO
Greece-Serp
-989.1
-1520.4
-2529.4
39.9
NO
Greece-Gua
-989.1
-1277.8
-2521.3
508.9
NO
Italy-Serpis
-973.5
-1520.4
-2503.8
20.0
NO
Italy-Guad
-973.5
-1277.8
-2301.6
100.6
NO
Serpis-Guad
-1520.4
-1277.8
-2946.2
296.0
NO
Transfer errors
66%
65%
42%
70%
Conclusions

Clear social interest on water scarcity problems in
the studied regions

Social interest translates into positive WTP for
reducing water scarcity damage

Reducing the probability of water restrictions in
households and allocating water to the
environment for maintaing the ecological status
generates significant social benefits

To be included in WFD implementation process
Conclusions

Sensitivity to scope: higher environmental flows
generate higher benefits

Previous experience and expectations imply
higher values for reducing probability of water
restrictions

Significant transfer errors across river basins
Thank you very much
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