This paper assesses the WTP and WTA for improvements and deteriorations, respectively, in irrigation water supply reliability. The assessment relies on a double-sided discrete choice experiment valuation using latent-class modeling accounting for preference and scale heteroge-neity. This valuation approach is empirically implemented using a case study of a Spanish irri-gated district significantly impacted by climate change. The results obtained show individual -specific preference heterogeneity in the WTA-WTP disparity, primarily driven by the different impacts of water reliability on farmers' utility (changes in business revenues and costs, uncer-tainty in business performance, and farm income effects) and interindividual differences in loss aversion (different degrees of endowment effect). Additionally, the significant scale heterogeneity and ordering effects found suggest that it may be advisable to use modeling approaches that account for them. Several policy-relevant implications can be drawn, including the non-neutrality of the initial allocation of property rights, repercussions on the cost-benefit of climate change adaptation measures, and the need to account for irrigators' preference heterogeneity in order to design successful market-based instruments.
Villanueva, AJ; Gómez-Limón, JA
Heterogeneity in the WTA-WTP disparity for irrigation water reliability
Water Resources And Economics