Integrated Modeling of Tap Water Perception and Consumption of Bottled Water: An Exploratory Analysis

Abstract

This paper presents a new integrated approach to address household perceptions of the quality of tap water and the influence of such perceptions on households’ decisions to use bottled water and the related consumption patterns. It is hypothesized that these perceptions influence households’ bottled water–related decisions. To the authors’ knowledge, this is the first time this approach has been adopted by including the output of the perception of the tap water model (probabilities of satisfaction levels) as an explanatory variable in the household consumption of bottled water model. This paper also evaluated people’s perceptions of tap water quality by conducting physiochemical tests on samples of tap water collected from households. A correlated random parameters ordered probit model was estimated to provide insights into factors shaping the perceptions of respondents toward the quality of tap water. A zero-inflated ordered probit model with correlated error terms that explicitly accounts for households’ quality of tap water perceptions was estimated in order to gain deeper insights into the factors influencing the decision to use bottled water and the levels of consumption. The results showed, among other things, that households’ perceptions of the quality of both tap and bottled water are important predictors of the amount of bottled water consumed by a household as its primary source of drinking water. Our results show the need to account for such perceptions when formulating a demand model for bottled water consumption. The majority (75.72%) of people believe that tap water is of unacceptable quality, whereas the physiochemical tests actually show the opposite.