Economic analysis of spatial preferences heterogeneity of water quality

The main objective of this study is to account for spatial preference variability in the economic valuation of water quality improvements in the river basin context. This is expected to be particularly relevant for the implementation of the European WFD, as it will involve spatially differentiated perceptions of the benefits of water quality changes. A choice experiment is developed based on maps to elicit welfare measures for water quality improvements across sub-basins in the Guadalquivir River Basin in Spain. Variation is introduced simultaneously in the spatial distribution of goods and services and their beneficiaries, for the accounting of spatial preference heterogeneity (i.e. people’s different valuation of changes in environmental good provision depending on where the changes take place in relation to where they live). According to our results, not accounting for spatial preference heterogeneity leads to an underestimation of welfare for water quality improvement when aggregating WTP values from sub-basins to the river basin as a whole.