Using a Choice Modelling Approach for Customer Service Standards in Urban Water
Date
2005
Authors
Hatton MacDonald, Darla
Barnes, Mary
Bennett, Jeffrey
Morrison, Mark
Young, Michael D
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Publisher
Wiley-Blackwell
Abstract
A series of reforms in the water industry in Australia has created a demand from the industry and regulators for objective methodologies to evaluate incremental changes in the customer service standards. In this paper, the use of choice modeling for estimating implicit prices associated with urban water supply attributes is explored. Results from multinomial logit (MNL) and random parameters logit (RPL) models show that increases in annual water bills and the frequency of future interruptions were the most important attributes. Implicit price confidence intervals based on the best models suggest that people are willing to pay positive amounts to achieve a water supply that is less frequently interrupted. The provision of alternative water supplies during an interruption and notification of the interruption were found to be unimportant to respondents. Choice modeling proved to be a useful technique and provided the industry and regulators with additional information for standard setting.
Description
Keywords
Keywords: Mathematical models; Parameter estimation; Random processes; Standards; Choice modeling; Customer service standards; Price estimation; Standard setting; Water resources; decision making; urban area; water economics; water industry; water management; water Choice modeling; Customer service standards; Economics; Reliability of water supply; Urban water management; Water decision making; Water policy
Citation
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Source
Journal of The American Water Resources Association
Type
Journal article
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2037-12-31