Willingness to Pay for Gray and Green Interventions to Augment Water Supply: A Case Study in Rural Costa Rica

Abstract

Many rural communities in developing countries experience severe water shortages, limiting their capacity for self-sustainability. This study used contingent valuation and choice experiment methods and in-person interviews to estimate household willingness to pay (WTP) for gray and green interventions to augment water supply in rural Costa Rica. In particular, we examined residents’ preferences for well construction, as a form of gray intervention, and reforestation, as a form of green intervention, aimed at alleviating water shortages. Household WTP to reduce annual water shortage by one day varied between $0.85 (95% CI = 0.77–0.94) and $1.32 (95% CI = 1.08–2.56) per month depending on the project. The results also indicated that households were willing to pay $2.28 (95% CI = 1.36–3.21) and $3.51 (95% CI = 2.57–4.44) per month to increase forest cover in the watershed by 140–180 and 300–340 ha, respectively, assuming no additional water provision from the reforestation project. Nonwater-related benefits comprised 25–34% of the WTP for green intervention, depending on the acreage scenario. We also observed that, even without the nonwater-related ecosystem service benefits associated with reforestation, the value of water from green intervention exceeded the corresponding value of water from gray intervention. The disparity between preferences for water obtained from gray and green intervention may be due to differences in corresponding timing, uncertainty, quality of additional water made available from the considered projects, and differences in value elicitation methods.