Investigating the Value of Parallel Pipeline Projects for Water Supply: A Contingent Valuation Study in South Korea
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1. Introduction
2. Literature Review
Although various CVM studies on water-related infrastructure and projects have been conducted, none have focused on the valuation of parallel pipeline projects. Moreover, previous studies have conducted surveys only for residents who directly benefit from the projects. Therefore, the key contributions of this study can be summarized as follows. First, our study is the first to measure the value of parallel pipeline projects. Second, our study includes the WTP of residents outside the project areas to consider the public nature of water infrastructure projects. Finally, our study explores the most important values considered by respondents when valuing parallel pipeline projects using the swing weighting method.
Table 1.
Previous CVM studies on water-related infrastructure and projects.
Table 1.
Previous CVM studies on water-related infrastructure and projects.
Authors | Research Object | Scope | Description | Main Results |
---|---|---|---|---|
Kontogianni et al. [25] | Water quality | Thessaloniki, Greece | Full operation of wastewater treatment plants | EUR 15.23/quarter |
Genius et al. [32] | Water supply | Rethymno, Greece | Municipal Enterprise for Water Supply and Sewerage (MEWSS) implementation | EUR 10.64/quarter |
Vásquez et al. [30] | Water supply | Hidalgo del Parral, Chihuahua, Mexico | Safe and dependable drinking water supply | USD 20.88/month |
Kwak et al. [2] | Water quality | Pusan, South Korea | Improved tap water quality | USD 2.2/household/month |
Tussupova et al. [14] | Water supply | Pavlodar region, Kazakhstan | Ensuring a safe piped water supply | USD 7.47/household/month |
Del Saz-Salazar et al. [31] | Water supply | Guadalaquivir River basin, Spain | Urban water supply infrastructure improvement | EUR 8/household/month |
Choi et al. [27] | Water quality | Han River basin, South Korea | Implementation of highland agriculture restrictions | USD 2.54/household/month |
Lee et al. [22] | Water quality | Soyang Lake, South Korea | Transition to environmentally friendly farming | KRW 36,115/household/year |
Paola et al. [26] | Water quality | Ferrera, Italy | Upgraded wastewater treatment plant | EUR 48.1/household/one-off payment |
Aslam et al. [21] | Water supply | Coalfield, Pakistan | Enhanced access to water services | USD 48.13/month |
Sehreen et al. [17] | Water quality | Dhaka City, Bangladesh | Effective water pollution management systems | USD 4.78/month |
Kim et al. [13] | Water supply | Korea | Water infrastructure and asset management adoption | USD 0.22/month |
Jimenez-Redal et al. [19] | Water supply | Ldjwi island, Congo | Operations and maintenance services for water infrastructure | USD 0.19/month |
Bui et al. [29] | Water supply | Hanoi, Vietnam | Reliable domestic water supply system | USD 12.2/household/month |
Sewunet et al. [28] | Water quality | Lake Tana, Ethiopia | Implementation of watershed management program | USD 10/year |
Hao et al. [15] | Water quality | Haikou City, China | Water quality enhancement | USD 4.01/household/year |
3. Materials and Methods
3.1. Overview
3.2. Survey Questionnaire
This study conducts a CV survey to estimate consumers’ WTP for parallel pipeline projects. We provided overall background information on the water infrastructure and parallel pipeline project. Then, we explained how the situations changed with and without the project. Specifically, we mentioned that if a parallel pipeline project is not conducted, inconveniences associated with water outages, leakages, contamination, or road closures in case of accidents may occur. However, we said that if the project is implemented, such inconveniences may be prevented or reduced. Next, we informed respondents that we would conduct two consecutive CV surveys asking about their WTP for parallel pipeline projects within and outside their residential area. We informed them that the project within their residential area is directly associated with their water use, and the project outside their residential area is indirectly associated with their water use and may have some indirect effects.
As setting the initial bid is important in the DC approach, we set the initial bids for projects within and outside respondents’ residential area using the results of a pilot survey that collected open-ended WTP responses from 100 respondents. For the project within their residential area, we set the payment vehicle as an additional water rate per 1000 L of water (KRW/1000 L) for the next five years because the project is directly associated with one’s water use. Using the results of the pilot survey, bids were set at KRW 100 (USD 0.08), KRW 200 (USD 0.15), KRW 300 (USD 0.23), KRW 500 (USD 0.39), and KRW 1000 (USD 0.77)/1000 L, and respondents were randomly assigned to one of these bids. The specific questionnaire for the survey is as follows: “Does your household willing to pay additional _____ KRW/1000 L charged proportional to your water use for the parallel pipeline project within your residential area?” For the project outside respondents’ residential area, we set the payment vehicle as an additional income tax for the next five years because the project outside their residential area is indirectly associated with water use. Using the pilot survey results, bids were set at KRW 1000 (USD 0.77), KRW 3000 (USD 2.32), KRW 6000 (USD 4.64), KRW 10,000 (USD 7.74), and KRW 20,000 (USD 15.48) per year, and respondents were randomly assigned to one of these bids. The specific questionnaire for the survey is as follows: “Does your household willing to pay additional _____ KRW per year as additional income tax for the parallel pipeline project outside your residential area?”.
Finally, since we expected that many respondents would have zero WTP for the public project, we added a follow-up question to respondents who responded “no” to the initial DC questionnaire asking if the respondent had any WTP for the project (SBDC spike). If the respondent responded “yes” to the follow-up question, the respondent had some amount of positive WTP, while responding “no” to the proposed bid (0 < WTP < bid). However, if the respondent responded “no” to the follow-up question, the respondent had zero WTP (WTP = 0).
3.3. WTP Elicitation Using Spike Model
where
3.4. Comparing the Relative Importance Using Swing Weighting
3.5. Sampling and Survey Methods
4. Results and Discussion
4.1. Estimated WTP for Parallel Pipeline Projects in South Korea
If we simply compare the estimates, the WTP for the project outside the region may seem trivial compared to that of the project within the region. However, the WTP outside the region (value imposed by people who do not directly benefit from the project) has significant implications for decision-making associated with the implementation of water infrastructure projects (including parallel pipeline projects).
Because such projects take time to be completed and are costly, they are usually conducted after a thorough feasibility test. This study’s findings suggest that the feasibility tests should consider the value imposed by people who do not directly benefit from the project, considering the public nature of the water supply. Moreover, while households in regions directly benefiting from the project would naturally impose a higher value per household than those that do not, the combined value imposed by residents from regions that are not directly benefited by such projects could be substantial, considering the number of households in the rest of the country.
4.2. Relative Importance Analysis Using Swing Weighting
The results show that the ranking of scores for value items for both projects (within and outside the region) is consistent, and the derived relative importance is not significantly different. Specifically, the health and sanitation value and the value for maintaining and improving living conditions show the highest relative importance. For projects outside the region, the relative importance for community integration and industrial–economic values is slightly higher. The annual value per million households for projects within the region ranges from KRW 16.9 billion to KRW 20.7 billion (USD 13.08 million to USD 16.02 million) per value item (a maximum difference of approximately 22%). For projects outside the region, the value ranges from KRW 826 million to KRW 977 million (USD 0.64 million to USD 0.76 million) per value item (a maximum difference of approximately 18%).
4.3. Analysis Results with Covariates
Therefore, associated institutions in South Korea can devise strategies to leverage the value imposed by the public on parallel pipeline projects. First, for residents within the project areas, it is necessary to raise awareness about the severity of potential problems related to climate change responses and community integration that may arise from disruptions in the water supply and promote how the project can contribute to the value of climate change responses and community integration. Additionally, for residents outside the project areas, highlighting the seriousness of potential industrial and economic problems that might occur due to water supply disruptions and emphasizing the industrial-economic value that can be created through the projects’ implementation are essential. For example, according to this study’s results, the South Korean public may place higher value on water supply projects for industrial use that have a high economic impact.
5. Conclusions and Policy Implications
This study employs the CVM to measure the WTP (imposed value) of the South Korean public for parallel pipeline projects to ensure a safe and stable water supply. Specifically, we apply the CVM separately for a project within the region from which respondents have a direct benefit and for a project outside the region from which respondents have no direct benefits. We use this approach to analyze the value resulting from the projects’ implementation from two different dimensions (direct and indirect beneficiaries) and utilize the spike model to estimate the WTP. The results from the spike model show that the median WTP for the parallel pipeline project by respondents within the region is KRW 691 (USD 0.53)/1000 L, while for respondents outside the region, it is KRW 5493 (USD 4.25)/year. Calculating the annual WTP of respondents within the region based on the average water consumption per person and average household size results in approximately KRW 110,000 (USD 85.13). Even though the WTP for the project outside the region is considerably lower than that for the project within the region, the results indicate that South Koreans put some value even on the parallel pipeline project outside their region.
Moreover, we utilize the swing weighting technique to compare the relative importance of the key value items. The results indicate that the most important values perceived by respondents from parallel pipeline projects are health and sanitation, improving and maintaining living conditions, and environmental values. On the one hand, climate change response, community integration, and industrial–economic values are considered relatively less important. However, the results from the spike model with covariates indicate that the climate change response and community integration values may have a significant impact on leveraging the imposed value for the project within the region. On the other hand, for the project outside the region, the results show that industrial–economic value may have a significant impact on leveraging the imposed value for the project.
The core significance of this study lies in proposing a framework that assesses the value of parallel pipeline projects for a safe and stable water supply, not just for residents who directly benefit within the project region but also for those residing outside the region, taking into account the public nature of water supply. Additionally, this study finds a difference between the value items South Koreans consider important in relation to the project’s implementation and those that can leverage the project’s valuation. This study’s key findings can help shape South Korea’s water infrastructure policy, and this study’s framework can be referenced and utilized in valuing other public infrastructure projects.
The limitations of this study and directions for future research are as follows. First, this study analyzes the general value of parallel pipeline projects, categorized by whether they are within or outside the respondent’s region. This prevents us from setting up and evaluating projects in a general context. Future studies should consider a specific project in a particular region using detailed information related to the project’s implementation to derive more specific implications for the project. Moreover, because this study is based on a survey conducted in South Korea, caution is needed when extending the discussion to other countries or regions. Future studies should revise the research framework by considering the specific conditions of the targeted region. Furthermore, given that the CVM is one of several approaches that support decision-making, it may be beneficial to justify the evaluation of the actual implementation of the project through incorporating data from other sources. Future studies could conduct integrated analyses by including these sources. Finally, while this study focused on the general valuation of parallel pipeline projects, some may be interested in the actual contribution of the project to solving problems such as water pressure fluctuation or tree root intrusion in specific regions. Future studies may consider such aspects to provide more detailed insights about the parallel pipeline projects.
Supplementary Materials
Author Contributions
Investigation, Y.H., J.S. and J.A.; data curation, Y.H.; writing—original draft, Y.H. and H.C.; conceptualization, J.S. and J.A.; resources, J.S.; validation, J.S.; supervision, J.S.; writing—review and editing, J.S. and J.A.; methodology, H.C.; formal analysis, H.C.; software, H.C.; visualization, H.C. All authors have read and agreed to the published version of the manuscript.
Funding
This research was supported by the Korea Institute of Energy Technology Evaluation and Planning (KETEP), the Ministry of Trade, Industry & Energy (MOTIE) of the Republic of Korea (20224000000260), and the National Research Foundation of Korea (NRF) grant provided by the Korean government (MSIT) (No. RS-2022-00165886).
Data Availability Statement
Authors do not have right to share the data.
Acknowledgments
This study is partially based on “Development of Policy Effectiveness Indicators Reflecting the Social Value of Water Projects”, which was conducted with the support of the Ministry of Environment of the Republic of Korea and K-water in 2022.
Conflicts of Interest
The authors declare that there are no competing interests.
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Figure 1.
Research framework of this study.
Figure 1.
Research framework of this study.
Figure 2.
Annual willingness to pay per household for projects within and outside region.
Figure 2.
Annual willingness to pay per household for projects within and outside region.
Table 2.
Social value items assumed for swing weighting technique.
Table 2.
Social value items assumed for swing weighting technique.
Key Value Items | Description | References |
---|---|---|
Environmental | Improving water quality and the environment surrounding water resources and infrastructure | [42,43,44,45,46] |
Health and sanitation | Preventing diseases and maintaining a sanitary environment | [47,48,49] |
Climate change response | Effectively corresponding to increasing natural disasters (e.g., floods, droughts, and fires) and reducing carbon emissions. | [50,51,52,53] |
Community integration | Resolving inter-regional water conflicts, protecting the vulnerable groups, and strengthening the community consciousness | [42,54,55,56] |
Industrial–economic | Maintaining and invigorating the local and national economy and accumulating and promoting related knowledge and research | [42,44,52,57] |
Maintaining and improving living conditions | Preventing inconveniences related to infrastructure maintenance and preserving the basic standard of living | [45,49,58] |
Table 3.
Response distribution of the contingent valuation survey.
Table 3.
Response distribution of the contingent valuation survey.
Case | Bid (KRW) |
Number of Samples |
Responses | ||
---|---|---|---|---|---|
Yes | No–Yes | No–No (Zero WTP) |
|||
Within region | 100 | 230 | 152 (66.1%) | 38 (16.5%) | 40 (17.4%) |
200 | 204 | 147 (72.1%) | 28 (13.7%) | 29 (14.2%) | |
300 | 195 | 125 (64.1%) | 32 (16.4%) | 38 (19.5%) | |
500 | 216 | 107 (49.5%) | 60 (27.8%) | 49 (22.7%) | |
1000 | 210 | 116 (55.2%) | 59 (28.1%) | 35 (16.7%) | |
Total | 1055 | 647 (61.3%) | 217 (20.6%) | 191 (18.1%) | |
Outside region | 1000 | 209 | 115 (55%) | 48 (23%) | 46 (22%) |
3000 | 216 | 102 (47.2%) | 55 (25.5%) | 59 (27.3%) | |
6000 | 223 | 97 (43.5%) | 53 (23.8%) | 73 (32.7%) | |
10,000 | 208 | 87 (41.8%) | 56 (26.9%) | 65 (31.3%) | |
20,000 | 199 | 58 (29.1%) | 60 (30.2%) | 81 (40.7%) | |
Total | 1055 | 459 (43.5%) | 272 (25.8%) | 324 (30.7%) |
Table 4.
Estimation results of the basic spike model.
Table 4.
Estimation results of the basic spike model.
Within Region | Outside Region | |
---|---|---|
Intercept (a) | 1.3594 *** (18.64) |
0.6782 *** (10.87) |
Bid (b) | −1.9687 *** (−17.51) |
−0.1235 *** (−18.78) |
Spike a | 0.2043 *** (17.23) |
0.3367 *** (24.15) |
Number of observations | 1055 | 1055 |
Log-likelihood | −1032.8503 | −1235.851 |
Mean WTP (KRW) b | 807 | 8817 |
95% Confidence interval c | [724, 894] | [7787, 10,028] |
Median WTP (KRW) d | 691 | 5493 |
95% Confidence interval c | [614, 768] | [4517, 6574] |
Table 5.
Results from the swing weighting.
Table 5.
Results from the swing weighting.
Value Items | Within | Outside | ||
---|---|---|---|---|
Relative Importance (Average Score) |
Annual Value from One Million Households (Unit: One Billion KRW) |
Relative Importance (Average Score) |
Annual Value from One Million Households (Unit: One Billion KRW) |
|
1. Environmental | 17.6% (78.5) |
20.0 | 17.3% (78.1) |
0.942 |
2. Health and sanitation | 18.2% (81.3) |
20.7 | 18.0% (81.0) |
0.977 |
3. Climate change response | 16.5% (73.9) |
18.8 | 16.4% (73.9) |
0.891 |
4. Community integration | 15.3% (68.3) |
17.4 | 15.6% (70.4) |
0.849 |
5. Industrial–economic | 14.8% (66.4) |
16.9 | 15.2% (68.5) |
0.826 |
6. Maintaining and improving living conditions | 17.6% (78.9) |
20.1 | 17.6% (79.2) |
0.955 |
Total | 113.7 | 5.439 |
Table 6.
Estimation results of the spike model with covariates.
Table 6.
Estimation results of the spike model with covariates.
Within Region | Outside Region | ||
---|---|---|---|
Constant (a) | −0.2063 (−0.34) |
−0.0096 (−0.01) |
|
Gender (male: 1, female: 0) | 0.2808 ** (2.14) |
0.0880 (0.73) |
|
Age (unit: year) | −0.0019 (−0.37) |
−0.0044 (−0.89) |
|
Education (unit: year) | −0.0114 (−0.38) |
0.0205 (0.75) |
|
Resides in the Seoul Metropolitan Area (1: yes, 0: no) |
0.0386 (0.25) |
0.0357 (0.26) |
|
Monthly household income (unit: million KRW) |
0.0798 ** (2.53) |
0.0207 (0.72) |
|
Household members (unit: person) | 0.1188 * (1.92) |
0.0549 (0.95) |
|
Monthly water bill (unit: KRW) |
−0.0183 (−0.43) |
0.0409 (1.03) |
|
Water cut-off experience (experienced: 1, not experienced: 0) |
0.1392 (1.07) |
0.1802 (1.51) |
|
Urgent improvement is required for the following values: | 1. Environmental | −0.0401 (−0.40) |
−0.1418 (−1.54) |
2. Health and sanitation | −0.0839 (−0.86) |
−0.1068 (−1.20) |
|
3. Climate change response | 0.1974 ** (2.23) |
0.0018 (0.02) |
|
4. Community integration | 0.1758 * (1.71) |
0.0957 (1.02) |
|
5. Industrial–economic | −0.0575 (−0.57) |
0.1642 * (1.77) |
|
6. Maintaining and improving living conditions | 0.0711 (0.68) |
0.0138 (0.14) |
|
Bid (b) | −2.0253 *** (−17.49) |
−0.1252 *** (−18.78) |
|
Spike a | 0.1965 (16.59) | 0.3341 (23.82) |
|
Number of observations | 1055 | 1055 | |
Log-likelihood | −1014.20 | −1224.87 | |
Mean WTP (KRW) b | 803 | 8572 | |
Mean WTP 95% C.I. c | [718, 897] | [7736, 9866] | |
Median WTP (KRW) d | 695 | 5505 | |
Median WTP 95% C.I. c | [618, 788] | [4610, 6505] |
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