Consumer response to two water shortage scenarios in Tucson, Arizona

Abstract

A survey methodology was developed to measure the consumer welfare loss associated with various municipal water shortages. The methodology was designed to provide monetary estimates of consumer welfare loss and was tested on 644 households in the Tucson metropolitan area in February, 1981. The methodology was based on welfare economic theory and used two types of welfare measures: willingness to pay and willingness to accept. Respondents were presented with two hypothetical water shortage situations and asked to estimate their welfare loss according to prepared bidding schedules. The results of the survey, although biased by bidding behavior, indicate that consumers place a low value on the welfare loss associated with water shortages. The bidding behavior can be explained in part by the bidding mechanics and in part by the inability of the respondents to know their true response to possible water shortages.