Valuing drinking water quality after a PFAS contamination event: Results from a meta-analysis benefit transfer

Abstract

Drawing upon an extensive body of valuation literature focused on water quality, this paper performs a meta-analysis benefit transfer exercise aimed at quantifying willingness to pay (WTP) for an enhancement in drinking water quality for households that have been directly exposed to Perfluoroalkyl Substances (PFAS) over recent decades in Italy. The analysis compiles metadata of 72 WTP estimates extracted from 40 previous valuation studies conducted in advanced economies. The benefit transfer is realized estimating a meta regression model (MRM) which includes both study design and socio-economic explanatory variables, according to the Weak Structural Utility Theoretic approach. To determine the most suitable MRM specification, a comparative evaluation of various model configurations is developed exploiting the Least Absolute Shrinkage and Selection Operator (LASSO) selection criterion, and assessing their predictive performances in terms of transfer error and explanatory power. The mean transfer error (MTE) and the adjusted R-squared of the preferred MRM are in line with past published meta-analyses (0.665 and 0.607, respectively). The parameters estimated in the model align with both economic theory and intuition. The benefit transfer process results in an estimated annual WTP of € 250.80 per household for improved drinking water quality in the PFAS-affected area and an aggregated value of social benefits from PFAS decontamination of around € 12 million.