Measuring the Economic Benefits of the Tap Water Supply Service in Urban Areas: The Case of Korea

This paper attempts to measure the economic benefits of tap water supply services in some urban areas of Korea. According to micro-economic theory, the economic benefit of water consumed is the sum of the actual water price and the additional willingness to pay (WTP) for the consumption. We apply th...

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Bibliographic Details
Published in:Water resources management 2013, Vol.27 (2), p.619-627
Main Authors: Lee, Won-Seok, Yoo, Seung-Hoon, Kim, Jeehyeong
Format: Article
Language:English
Subjects:
Atmospheric Sciences
Civil Engineering
Conduction
Consumption
Decision making
Drinking water
Earth and Environmental Science
Earth Sciences
Earth, ocean, space
Economics
Environment
Exact sciences and technology
Feasibility studies
Geotechnical Engineering & Applied Earth Sciences
Households
Hydrogeology
Hydrology
Hydrology. Hydrogeology
Hydrology/Water Resources
Interviews
Metropolitan areas
Microeconomics
Prices
Questionnaires
Resource management
Studies
Tap water
Urban areas
Valuation
Water resources
Water shortages
Water supply
Willingness to pay
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Summary:This paper attempts to measure the economic benefits of tap water supply services in some urban areas of Korea. According to micro-economic theory, the economic benefit of water consumed is the sum of the actual water price and the additional willingness to pay (WTP) for the consumption. We apply the dichotomous choice contingent valuation method to assess the additional WTP using specific cases of four cities located in the metropolitan area of Korea. Both parametric and non-parametric approaches to obtaining the mean WTP estimates are used. The results show that the mean additional WTP for the tap water supply service is estimated to be KRW 163.38 (USD 0.13) and KRW 223.89 (USD 0.18) per m 3 using parametric and non-parametric approaches, respectively. Given that the price of tap water is 641.66 per m 3 , the residents’ economic benefits that ensue from the tap water supply service are computed as KRW 805.04 (USD 0.63) and KRW 865.55 (USD 0.68) per m 3 , respectively. This information can be beneficially utilized in conducting an economic feasibility study for a new project related to tap water supply service.
ISSN:0920-4741
1573-1650
DOI:10.1007/s11269-012-0206-y