The Two-Edged Sword of Altruism in Willingness to Pay for Water Infrastructure and Affordability Programs

Abstract

Aging water and sewer infrastructure in the United States poses significant health and environmental risks. While higher water and sewer rates can finance infrastructure replacement, they may also exacerbate affordability challenges for low-income households. This study employs a choice experiment to estimate public valuation of infrastructure replacement programs and statewide water affordability programs that ensure water and sewer access for low-income households. The study also explores if altruistic preferences and perceptions about beneficiaries’ water use influence program support and develops a novel measure of altruism suitable for online surveys. Analysis of survey responses from 1,732 Michigan and Ohio residents reveals strong public support for infrastructure replacement programs that improve health and environmental outcomes. Altruists have a higher willingness to pay (WTP) than non-altruists for both infrastructure replacement and affordability programs. Paternalistic altruists, that is, altruists who care about consumption of specific goods such as water and sewer, have higher marginal WTP for addressing deteriorating health effects from aging infrastructure. While altruists show higher WTP for affordability programs compared to non-altruists, their WTP can be lower if altruists have concerns that beneficiaries of a water affordability program will waste water. Policy implications include making the impact of aging infrastructure tangible, addressing wastefulness concerns, and incentive-based affordability programs for viable water and sewer programs.