Water and sewerage companies are regional monopolies in the UK. A government agency regulates these companies, setting standards on quality of service to customers, and every 5 years sets prices that companies can charge customers over the ensuing quinquennium. We use a stated choice experiment model to estimate benefits to water company customers of changes across 14 water service factors. The estimated values were quite similar for each service factor across models (conditional logit (CL), CL quadratic, nested logit (NL), or NL quadratic). Estimates of the cost of infrastructure maintenance and improvement with risk of asset failure, along with CL benefit estimates, permit economic optimization across the water company's whole investment program.
Assessing water company customer preferences and willingness to pay for service improvements: A stated choice analysis
Scarpa, Riccardo;
2005-01-01
Abstract
Water and sewerage companies are regional monopolies in the UK. A government agency regulates these companies, setting standards on quality of service to customers, and every 5 years sets prices that companies can charge customers over the ensuing quinquennium. We use a stated choice experiment model to estimate benefits to water company customers of changes across 14 water service factors. The estimated values were quite similar for each service factor across models (conditional logit (CL), CL quadratic, nested logit (NL), or NL quadratic). Estimates of the cost of infrastructure maintenance and improvement with risk of asset failure, along with CL benefit estimates, permit economic optimization across the water company's whole investment program.
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