Climate Change and Households’ Willingness to Pay for Protecting High Quality Water and Its Provision in a Small Basin at Ecuador

Abstract

In this article we aim at eliciting households’ willingness to pay (WTP) for protecting water quantity and quality, by restoring a small basin, in the face of climate change in Ecuador. To do so, we carry out a discrete choice experiment based on a representative survey of 248 users of the water system that depends on such basin; this type of methodology is often used in the economics literature to predict consumer choice and prices. Our results suggest that about 62.1 % of the respondents are willing to pay to secure water quantity and quality at home by carrying out a restoration plan of the basin to cope with climate extreme events. Households’ willingness to pay for restoring the basin and securing water quality and quantity is about 1.24 and 0.5 dollars, respectively. These payments would be charged in the water bill in the form of monthly local taxes. Our findings also suggest that households’ climate change perceptions have a significant effect on the willingness to pay. These results might constitute important inputs for policy makers to take decisions on the value of water and on the amount of investments needed to adapt to climate change.