Understanding Water Utility Attitudes toward Water Transfers and Risk: Pretest Results

Abstract

Water transfers between utilities can be a cost-effective substitute for supply infrastructure expansions when seeking to reduce vulnerability to drought. Water utility employees may choose not to use water transfers, however, if they are risk averse, have nonmonetary preferences against transfers, or are uninformed about the benefits of transfers. A pretest is conducted for two surveys that address these issues. The results indicate that, on average, employees are indeed risk averse and prefer supply expansions to transfers, but they become more receptive to transfers after learning more about them. In addition, there is considerable heterogeneity in beliefs; hence, a subset of water utilities may be inclined to use water transfers.