Natural Resource Damage Assessment: Methods and Cases

household were not significant predictors of willingness to pay.
Poe (1998) examined willingness of private well owners to pay for a groundwater
protection program that would ensure that nitrate standards remain below 10mg/L in Portage
County, Wisconsin. Willingness to pay was found to be significantly positively related to
existing nitrate levels in the well, and either age, education, or income.
Poe and Bishop (1999) estimated willingness to pay for a groundwater protection
program that would reduce nitrate levels in all Portage County wells by 25%. They found that
willingness to pay increased with nitrate concentrations, but the rate of increase was diminishing
with contamination levels. They also found that nonuse concerns for the health of others had a
positive significant effect on willingness to pay. Actual averting actions that have been
undertaken did not negatively impact willingness to pay. The estimated willingness to pay for a
25% reduction from 14.5 mg/L was $412 per year per household. This study was based on a
well-developed theoretical model of willingness to pay and the researchers provided respondents
with information on the nitrate levels in the researchers’ own well.
Crutchfield et al. (1997) examined the willingness to pay for installation of a water filter
that could either reduce nitrates in tap water to safer levels or completely eliminate nitrates from
drinking water to households in the White River Region in Indiana, Central Nebraska, Lower
Susquehanna and Mid-Columbia Basin in Washington State. They found that willingness to pay
was positively related to income, extra income, and number of years lived in the zip code, but
negatively related to age. The higher estimate obtained by Crutchfield et al. (1997) as compared
to that obtained by Poe and Bishop (1999) could reflect the incremental benefits of reducing
nitrates from safe levels to zero.
Hurley et al. (1999) used data from a CV study in Clark and Adams counties in Iowa to
determine rural residents’ willingness to pay to delay nitrate contamination of their water supply
from large animal confinement facilities by 10, 15, and 20 years. Both counties relied heavily on
surface water supplies for drinking water. The researchers found that higher education, income
and expected length of time to remain in the community were positively and significantly related
with willingness to pay values. Willingness to pay ranged from $118/HH/year for a 10 year delay
to $191/HH/year for a 20 year delay by a household with sample mean characteristics. However,
the study suffered from a low overall response rate, a small sample of private well users that
would be affected by nitrate contamination, and the fact that over 50% of the survey respondents
rejected the scenario and stated no willingness to pay for any delay in nitrate contamination.
Benefit transfer methods are one way to use these estimated values for policy analysis or
for inferring the value of groundwater in other regions. Crutchfield et al. (1995) used benefits
transfer methods using the three previous studies summarized in Table 3.3 (Shultz and Lindsay,
1990; Jordan and Elnagheeb, 1993; and Sun et al., 1992) together with farm and county level
data for four regions (the White River Region in Indiana, Central Nebraska, the Lower
Susquehanna River, and the Mid-Columbia Basin in Washington State) and estimated the
benefits of protecting rural drinking water from contamination caused by agricultural chemical
residues. They use the data collected from the four regions being studied to substitute for the
explanatory variables used in the three original studies and estimated willingness to pay for those
69