Improving Drinking Water Quality in South Korea:A Choice Experiment with control for Hypothetical Bias

Increased pollution leads to a constant decrease of drinking water quality worldwide. Due to safety concerns, unpleasant taste and odour only about 3% of the population in South Korea is drinking untreated tap water. The present study uses choice experiments and cost-benefit analysis to investigate the feasibility of installing two advanced water treatments in Cheongju waterworks in South Korea. The waterworks is situated in the middle of the country and is providing more than half a million people with drinking water. The study uses latent class attribute non-attendance models in a choice experiment setting in order to estimate the benefits of the two water treatments. Moreover, it uses various methods to correct for potential hypothetical bias. This is important as hypothetical bias impedes the reliability of survey results. The lower bound of the median WTP for installing a new advanced water treatment system is about $2 US/month, which is similar to the average expenditures for bottled water per household in South Korea. These lower bounds were found using bootstrapping and simulations. Scenarios under which the instalment of the advanced water treatments is feasible are discussed together with environmental solutions in the long-run.