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USING A CHOICE MODELLING APPROACH FOR CUSTOMER SERVICE STANDARDS IN URBAN WATER 1
Author(s) -
MacDonald Darla Hatton,
Barnes Mary,
Bennett Jeff,
Morrison Mark,
Young Michael D.
Publication year - 2005
Publication title -
jawra journal of the american water resources association
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.957
H-Index - 105
eISSN - 1752-1688
pISSN - 1093-474X
DOI - 10.1111/j.1752-1688.2005.tb03766.x
Subject(s) - multinomial logistic regression , water industry , mixed logit , service (business) , discrete choice , water supply , environmental economics , logit , econometrics , business , economics , computer science , marketing , logistic regression , environmental science , machine learning , environmental engineering
A series of reforms in the water industry in Australia has created a demand from the industry and regulators for objective methodologies to evaluate incremental changes in the customer service standards. In this paper, the use of choice modeling for estimating implicit prices associated with urban water supply attributes is explored. Results from multinomial logit (MNL) and random parameters logit (RPL) models show that increases in annual water bills and the frequency of future interruptions were the most important attributes. Implicit price confidence intervals based on the best models suggest that people are willing to pay positive amounts to achieve a water supply that is less frequently interrupted. The provision of alternative water supplies during an interruption and notification of the interruption were found to be unimportant to respondents. Choice modeling proved to be a useful technique and provided the industry and regulators with additional information for standard setting.