Household Attitudes toward Water Rate Increases Based on Perceptions of Water Service Reliability and Quality: An Exploratory Analysis

Abstract

Due to the high costs associated with maintaining and upgrading water infrastructure systems, selecting an appropriate water rate to charge for water service is an important step for water utilities. Understanding the consumption patterns under different rate conditions is important because revenues generated from consumers form the backbone of water utilities’ financial model. This paper describes the results of a statistical analysis based on a survey of household attitudes toward water service reliability and quality in a Midwestern US city to identify influential factors that are likely to be associated with supporting or opposing water rate increases, as well as influencing water consumption patterns after such rate increases. Using a multivariate binary probit approach, the statistical estimations cover a range of socioeconomic factors affecting individuals’ likelihood of supporting increases in water rates. The results provide insights as to how individuals are likely to respond to water rate increases based on the reliability of current water services and the quality of the supplied water.