Research on customers’ willingness-to-pay for service changes in UK water company price reviews 1994–2019

Abstract

Water companies are regional monopolies in the UK, and subject to quinquennial price reviews to ensure customers receive value for money. This paper documents the application and evolution of stated preference methodology in the quinquennial price review research. Stated preference methods are used to assess customers’ preferences for changes to water supply, waste-water, and environmental services; and customers’ willingness-to-pay, or willingness-to-accept, water bill amounts for changes to these service levels. Recently revealed preference methods have been given more prominence in estimating values for some water services. The application of stated preference, and revealed preference, has seen continued attempts, in successive price reviews, to improve the accuracy and reliability of values for water services, as an input into the cost–benefit analysis of water projects, and water company business plans.