A choice experiments approach towards evaluating household perception of environmental and resource costs attached to water scarcity

Sustainable water management, in the last years, has become a major issue in Europe. The Water Framework Directive (WFD) introduces economic concepts in water management, including the need to take into account of the full cost in water-related decisions. Even in countries like Italy were the WFD has not been implemented yet, these principles have become an important reference for water management decisions. However, the application of full cost concepts requires the development of techniques for the evaluation of such costs. The objective of this paper is to test the suitability of choice experiments for the estimation of environmental and resource costs and benefits (ERCB) in the context of the application of the WFD. We restrict our attention to environmental effects due to water abstraction from surface water bodies and to non market values attached to water allocation to specific productive sectors. The results of the paper show that households give a relevant WTP for leaving more water in the environment and to guarantee energy sector, while they show no interest in guaranteeing water availability to agriculture and industry sectors. The experience (more than the results) shows the importance of implementation details in determining the outcome of these evaluation techniques.