using choice modelling to reveal waste water preferences in regional victoria

Presented at the International Conference on Integrated Concepts on Water Recycling, Wollongong, NSW, Australia,14–17 February 2005.

0011-9164/06/$– See front matter © 2006 Elsevier B.V. All rights reserved

Desalination 188 (2006) 31–41

Using choice modelling to reveal waste water preferencesin regional Victoria

Bethany Coopera, Lin Crasea*, Brian Dolleryb

aSchool of Business, La Trobe University, Albury-Wodonga Campus, Wodonga, Victoria 3689, AustraliaTel. +61 (2) 6058-3834; Fax: +61 (2) 6058-3833; email: [email protected]

bSchool of Economics, The University of New England, Armidale, NSW, 2351, Australia

Received 9 November 2004; accepted 29 April 2005

Abstract

Water reuse and recycling is the subject of intense scrutiny in Australia as demand for the resource approachessustainable supply limits. In many cases this has resulted in substantive work being undertaken to understand theengineering or technical solutions to recycling problems. In addition, much of the focus on wastewater recycling iscentred on larger urban communities where the scale of engineering works is most likely to prove financiallydefensible. However, focusing attention solely on recycling from this relatively narrow perspective overlooks thebroader catchment-wide benefits of improved wastewater treatment, particularly in smaller communities. This papercontends that improving wastewater treatment in such communities provides significant recycling opportunities thatextend beyond the immediate locale. On this premise, the growing interest in improved wastewater treatment in ruralVictoria is explored before offering a methodology for quantifying individual preferences in small towns.

Keywords: Wastewater preferences; Choice modelling; Small towns

1. Introduction

Water is both an integral component of theecosystem and a fundamental social and eco-nomic good [1]. In addition, management of theresource is receiving unprecedented attention as

*Corresponding author.

demand continues to rise and approaches thelimits of sustainable supply, particularly in partsof Australia. On the demand side, three broadfactors have been responsible for increasing thedemand for water resources: (1) expanded use ofwater in agricultural and industrial contexts;(2) enhanced water distribution strategies forlarge urban populations, and (3) recognition of

doi:10.1016/j.desal.2005.04.099

B. Cooper et al. / Desalination 188 (2006) 31–4132

water as a potentially effective human and indus-trial waste transport and treatment mechanism[2].

The significant relationships between theseelements of demand make it difficult to considereach in isolation. Only when the resource isabundant relative to total demand is it possible toconsider using water as a vehicle for treating andtransporting waste separately from its usefulnessin servicing the water consumption needs ofurban populations. Even then there will be criticalthresholds to the capacity of the resource toadequately fulfill both tasks, since diffuse wastesstill bring potential harm to human health. It isthis interrelationship among the various demandsfor water that has prompted calls for holisticapproaches such as integrated catchment manage-ment (ICM) or total catchment management(TCM) [3], which allow for consideration of deci-sions across all users and uses.

Attention to ICM and the acknowledgementthat water resources have become critically scarcein Australia have collectively served to sharpenresource managers’ focus on what was onceeuphemistically referred to as “waste” water.Symptomatic of the current attention to thiscomponent of the water cycle is the widespreaddesignation of “reclaimed” water, “reuse” water,“nutrient-rich” water, and the like [4]. Clearly,what was once regarded as a costly side-effect ofhuman and industrial consumption has nowassumed the status of an alternative resource.

The current trend towards examining waste-water as an alternative water resource has, todate, been dominated by two approaches. Firstly,an expansive literature has developed dealingwith the technological/engineering facets of thereuse debate with numerous authors reporting onthe relative merits of alternative treatment tech-nologies [5–8]. Secondly, there is a growingliterature focusing on the economic dimensions ofreuse [4,9–11]. This latter genre of work hastended to employ techniques like benefit cost

analysis to adjudge the welfare implications ofparticular reuse projects, often studying the rami-fications on larger communities where economiesof scale favour adoption. By way of contrast,relatively little is known of the economics ofamending wastewater technologies in small ruraltowns, primarily because recycling and reuse areusually viewed as financially unviable in thesecontexts.

One of the problems of adopting this outlookis that it neglects the downstream recyclingbenefits that can accrue to the total catchment asa result of wastewater treatment in small towns.Thus, according to a TCM philosophy, a geo-graphically broadened scope of interest is indi-cated. In economic parlance, this implies that theproperty rights pertaining to the externalitybenefits from improving wastewater in smalltowns are ill-defined, thereby leading to aninefficient outcome.

The Macquarie Dictionary defines the term“recycled” as “appearing again in an altered guiseor role” [12]. Similarly, “recyclable” is describedas “of or relating to products or materials whichcan be broken down after use to serve as the rawmaterials for new manufactured products” [12].Importantly, neither definition places a spatialconstraint on the concept, and yet we often con-ceptualise recycling as occurring within a singlehome, town or city. Our contention in the presentcontext is that enhancing the wastewater streamemanating from a given town (albeit a smalltown) exemplifies a form of catchment-widerecycling that should not be disregarded. Putsimply, whilst the localised economics of waste-water reuse within small urban communities maynot stack up, when considered in the context ofthe wider catchment, it deserves closer scrutiny.

In line with this philosophy, the Victoriangovernment is presently examining wastewatertechnologies in smaller urban communities witha view to identifying appropriate technicalimprovements. Ultimately, improving the waste-

B. Cooper et al. / Desalination 188 (2006) 31–41 33

water treatment in small country towns couldproduce two distinct benefits. Firstly, it woulddemonstrably address local environmental andhuman health concerns in these centres. Second-ly, it stands significantly to enhance water qualityfor downstream users and thereby offer a form ofcatchment-wide reuse. However, whilst suchbenefits are assumed desirable, their relativeimportance in the minds of consumers has notbeen assessed.

It is the purpose of this paper to detail researchaimed at empirically eliciting the preferences forenhanced wastewater services of residents insmall rural towns. This paper utilises an empiricalapproach to examine consumers’ decisions toimprove their current wastewater system. In parti-cular, it examines a conjoint technique known aschoice modelling and discusses how the initialstages of this technique have been utilised in thecurrent context.

The paper itself comprises five main parts.Section 2 identifies various issues apparent in thewater and wastewater sector, specificallyfocusing on the current status of wastewaterservices in small rural towns across Victoria. InSection 3 some theoretical considerations areexplored in the experimental design processnecessary to underpin any analysis of consumerpreferences in this context. The initial findingsfrom interviews and focus group phases of theexperiment are presented in Section 4.

2. Water and wastewater in Victoria

2.1. National water dimension

Perhaps the most notable national influence onurban water reform was the CoAG Agreement onWater Resource Policy (or Water Reform Frame-work) signed in February 1994, and later theCompetition Principles Agreement in April 1995.These reforms included establishing prices tofully recover costs, recognising that the environ-

ment has a legitimate demand on the resource,separation of delivery and resource managementfunctions and breaking the nexus between landand water rights to foster water trade. Notably,urban water authorities were expected to intro-duce tariff regimes that reflected usage, placegreater emphasis on service delivery and broadlyadopt the principle of “user pays”.

Subsequently, water quality, water avail-ability, environmental health and sustainabilityhave developed into significant political issues[13]. However, at the national level, wastewatermanagement has received relatively limitedattention. It was not until August 2003 that theNational Water Reform Framework began toincorporate recycled water into its considerations[14]. This was followed in 2004 with CoAGagreeing to establish national guidelines for watersensitive urban design, presumably incorporatinga closer examination of urban reuse. In sum, thereis an increasing consensus that wastewatereffluent, rainwater, and stormwater are not merelyproblems to be solved. In the current milieu theyare potentially resources of value.

2.2. Victorian water reform

The legislation governing water resourceusage in Victoria is predominantly encapsulatedin the Water Act of 1989. However, in 2003 thegovernment released a Green Paper followed in2004 by a White Paper titled “Securing our WaterFuture” [15]. This embodied a range of reformsaimed at irrigators, environmental interests,industrial and urban users. In the context of urbanwastewater services and reuse, the document alsoproffered several pertinent policy statementsincluding the following:“Urban water supplies comprise all availablewater resources including recycled water,stormwater, rainwater and greywater” (15, p.106)C “The Government will require all urban water

authorities to assess opportunities for the use


of recycled water and other alternative sup-plies in the development of Water Supply–Demand Strategies [which] ... will establishwater recycling targets” [15, p. 106].

C “The Government will support strategic recy-cling and water recovery projects that providesignificant benefits at a State and regionalscale” [15, p. 110].

C “All Victorians will be provided with safe andreliable drinking water and sewerage servicesthat protect public health and the environ-ment” [15, p. 121].

The latter two of these policy stances represent asignificant challenge with approximately 42,000properties in outer Melbourne requiring sewerageinfrastructure and another 22,000 properties intowns of more than 100 properties lacking reticu-lated sewerage [15].

2.3. Wastewater services in Victoria

In the early 1970s the Victorian non-metro-politan water industry comprised 370 watertrusts, sewerage authorities and local councils,each operating independent water and sewageservices. The election of the Kennett governmentin October 1992 ushered in a range of contro-versial reforms to local government and theadministration of water and wastewater services.The 1993 amalgamations reduced the number ofwater authorities from 83 to 17 [16]. Currently,non-metropolitan water and wastewater servicesare ostensibly provided by only 14 regional waterauthorities.

Whilst the provision of water and wastewaterservices in non-metropolitan Victoria now resideswith rural urban water authorities (RUWAs),smaller towns are often excluded from thedeclared areas for which RUWAs are responsible.Moreover, the amalgamation process has leftmost RUWAs with a complex mix of water andwastewater distribution systems. Some areas havelittle potential for economies of scale and yet

pressure remains to achieve financial sustain-ability and to deliver the levels of serviceexpected by communities. These challenges wereincreased in 1997 when the state governmentmade a commitment to sewer all Victorian townswith a population in excess of 500 by 2001. Since2001, the state has relied primarily on the use ofwater service agreements to encourage RUWAsto extend wastewater services to small townsunder the New Town Sewerage Initiative. Thisinitiative provided $22.5 million of funding andresulted in sewering more than 50 rural andregional towns [15].

However, two main challenges remain. Firstly,the provision of wastewater services to smallrural towns is constrained by the need for waterauthorities to remain financially viable. Mostauthorities also realise that there are economiclimits that prevent most small communities fromfunding such works in their entirety (i.e., it is notfeasible to invoke the user pay principle). More-over, it is common for the community in a smalltown to react negatively to a proposed extensionof wastewater services because of the financialimplications for households and the perceptionthat such services amount to “gold-plating”. Inlight of this constraint, the state has announced itsintention to explore innovative approaches moresuited to small-scale applications [15].

Secondly, in those communities not sewered,responsibility for enforcing appropriate manage-ment of wastewater rests predominantly withlocal government, often resulting in significantenforcement costs. Moreover, local governmentfaces a conundrum insofar as the requirement tomaintain larger lot sizes to suit on-site disposal isoften at odds with their desire to increase deve-lopment in order to yield higher rate revenues.

Both of these problems are exacerbated by therelative dearth of public information about thepreferences of such communities for differenttypes and levels of service. Similarly, there hasbeen insufficient attention paid to the alternativetechnologies for meeting health and environ-


mental concerns and the ways in which theattitudes of small communities vary betweenthese alternatives. A way forward would appearto reside in treating wastewater systems andservices as “products” with the potential to con-tribute value to consumers. Moreover, being ableto unbundle the attributes of these products andestablish their contribution to overall utilitywould provide valuable insight for decisionmakers, particularly those with a view to enhanc-ing the downstream reuse prospects of theresource.

3. Conjoint analysis and choice modelling

According to consumer decision theory, con-sumers make decisions based upon a product’sattributes [17]. The aim of conjoint analysis is tostatistically unbundle these attributes and assignthe part-worth utilities to them. However, thisrelies upon consumers being able to allocateutility to the various levels of an attribute andsubsequently develop a total utility for a specifiedproduct or service, which can be real or hypo-thetical [18]. Operationalising this techniquerequires that the product/service/idea be appro-priately described in terms of its relevant attri-butes and levels, and that respondents aresubsequently provided with suitable stimuli [19].Thus, if we consider wastewater systems to be aproduct, then a conjoint study will enable us toidentify its attributes and determine their relativeimportance for consumers.

Choice modelling (CM) is a type of conjointtechnique. CM provides for the identification ofthe trade-offs that each consumer makes betweenattributes. For instance, if one of the attributes isthe price that an individual would pay to securethe change, estimates of the marginal value ofchanges in each attribute can be generated. Inaddition, CM can develop estimates of compen-sating surpluses for product changes relative tothe business-as-usual situation [21].

The research problem requires a methodologycapable of providing empirical estimates ofconsumers’ willingness to pay for the specificattributes of a wastewater system. Informationabout towns’ preferences and capacity to pay forwater services will thereby assist RUWAs inprioritising welfare maximising investments.

In a CM experiment, participants were givena series of choice sets, each containing alternativeproducts. An alternative is comprised of a numberof attributes, with each attribute assigned a value,generally referred to as a level. For instance, analternative for a wastewater system may bedescribed in terms of the price of the system andthe environmental benefits that it offers. Eachchoice set contains a no change option, whichenables estimation of the absolute value of alter-natives. Participants are required to select theirpreferred option from each choice set. The speci-fied attributes are common across all options;however, according to an experimental design,their levels differ from one option to another [21].An example of a choice set that might be used insuch an experiment is provided in Table 1.

3.1. Experimental design implications

“Designing the project is a critical step tosuccess” [19, p. 399]. CM typically uses an ex-perimental design process to develop the choicesets for respondents. Essentially, this process hastwo main functions. Firstly, to identify those

Table 1Example of a choice set

Which wastewatersystem would youchoose?

Price peryear ($)

Type ofwastewatersystem

Option 1 X 50 ReticulatedOption 2 75 Independent

with aerationOption 3 No change No change


attributes that are likely to influence consumerreferences and assign relevant levels for the con-duct of the research. Secondly, the process aimsto develop an appropriate model for consumerpreferences. Moreover, the experimental designis characterised by an iterative process. In somecases, the attributes of one alternative mayimpinge upon the utility of another; however,effective survey design can minimise this andenhance the precision with which parameters areestimated [22].

3.2. Discovering relevant attributes and levels

Several aspects are important to considerwhen specifying attributes and their levels.Firstly, inclusion of all attributes within a choiceexperiment is not feasible, as a larger number ofattributes results in an increased number of para-meters that must be statistically estimated. There-fore, the researcher must identify those attributesthat are simultaneously significant to the researchquestion, important in the choice decision of mostrespondents, and controllable within the contextof the experiment. Ultimately, this can beachieved by employing an iterative processinvolving interviews, focus sessions, and surveypre-testing [23].

Secondly, it is important to include levels ofattributes that are “actionable”. More specifically,attribute levels such as small, medium, and largerestrict the respondent’s ability to develop precisejudgements about the impact of a level on thechoice decision [19], thus, limiting certaintyabout the part-worth estimates derived from theexperiment.

Finally, when designing the choice experi-ment, the researcher must consider the potentialfor multi-collinearity. Essentially, this effects theestimation of parameters within the model andmay cause unrealistic choice options. However,multi-collinearity can be overcome by the utili-sation of super-attributes, comprising a number of

attributes, although this increases the complexityof the choice experiment [24].

3.3. Limitations of choice modellingEssentially, a number of limitations surround

the CM technique. Specifically, the design of theexperiments, the presence of strategic behaviour,fatigue, learning and the complexity of theexperiment itself require consideration [25].Additionally, whilst choice models allow for theunbundling of the part-worth utilities of thevarious product attributes, they do not, however,explain why individuals make particular choices[26]. In order to improve our understanding of thedecision process, the researcher can supplementthe choice experiment with additional psycho-graphic and demographic information, althoughit needs to be acknowledged that this adds greaterburdens to participants.

In this paper we specifically designate waste-water technologies as a product that consists ofvarious attributes of interest to potential con-sumers. Thus, our aim is to use CM to identifythose attributes that are most valuable to smallrural communities and thereby explore mechan-isms for expanding water recycling options.

4. Initial findings of this CM: determination ofattributes and levels

Any CM experiment should (1) include attri-butes in the experiment that are meaningful toparticipants and (2) have a range of levels thatprompts choice variation to allow empiricalestimation of part-worth utility. To ensure thatsalient attributes are identified and appropriatelevels selected for the choice experiment, severaliterative phases are commonly undertaken.Firstly, in-depth focus interviews with informedindividuals are conducted to gain an appreciationof the decision context likely to confront parti-cipants. The second phase involves using focus


groups to test the understanding proffered by“experts” and ensure that the experiment is realfrom the participants’ perspective.

4.1. Interview phase: technical perspective

Initially, in-depth focus interviews wereconducted with several technicians from RUWAsin the northeast of the state. These sessions hadthree primary objectives. Firstly, they provided anoverview of the extant wastewater managementfor smaller rural towns across northeast Victoria.Secondly, the interviews were likely to enhancethe researcher’s knowledge of the availablewastewater systems and the technological charac-teristics of these systems. Finally, it was pre-sumed that technical expertise would assist inidentifying the relative level of environmentaland human harm that accompanies each waste-water system and the likely levels of other attri-butes. Ultimately, it was assumed that theseinterviews would at least reveal those productattributes that are valuable from a technical orsupplier perspective.

Most of those interviewed indicated that theamount paid by the household for the wastewaterservice was likely to be the most salient productattribute. Perhaps not surprisingly, technicianstended to approach the levels of this attributefrom a cost perspective. Put differently, mosttechnicians were more inclined to consider con-struction, maintenance and operating costs as thefoundation for establishing prices rather thanwhat consumers were willing to pay to acquirethe benefits of the service. In most cases tech-nicians tended to draw on previous experienceswith the New Town Sewerage initiative whichcomprised a mostly conventional sewerageinfrastructure.

The second attribute to be developed from in-depth technical interviews was the impact ofalternative wastewater systems on the environ-ment and human health. Attempts to refine this

attribute usually resulted in extensive debateabout specific systems and a location-specificimpact. The problem with this approach was thatit would severely limit the extent to which awider CM could be applied in a range of settings.To progress the development of this attribute,technicians were asked to consider, in generalterms, the impact of three broad wastewatermanagement systems. More specifically, techni-cal experts were asked to suggest an approximatelikely impact on environmental and human healthwhich might be attributable to each system. Fig. 1illustrates the initial levels for this attribute whichmight later be presented to participants as “typeof wastewater system”.

One of the advantages of this approach wasthat it avoided the potential collinearity problemresulting from separating human and environ-mental health. Put simply, these variables tracktogether, and statistical modelling where thesewere treated as separate explanatory variablesproved problematic. In essence, developing awastewater systems attribute amounts to a “super-attribute” in the Hair et al. [19] nomenclature.

At the conclusion of this phase it appearedfeasible to conduct a choice experiment that com-prised only two variables, namely, price andwastewater system type, which encapsulated theeffects on human and environmental health.

4.2. Focus group phase: consumer perspective

Extensive focus group sessions were con-ducted within small towns across rural northeastVictoria in an attempt to gain an understanding ofthe consumers’ perspective on wastewater. Focusgroup participants varied across a number ofdemographic and positional factors, althoughmost groups were dominated by active com-munity members. Essentially, these focus ses-sions aimed at identifing the salient attributes andlevels relative to wastewater systems from a user(as opposed to a supplier) perspective.


Independent system with aeration componentThis is a septic tank system with an installed aeration filter that is able to improve the effluent quality beingdischarged on-site. With this system there is a:50% chance that individuals will not get sick, and the system is able to have a positive effect on the environment 60% of the time.Semi-independent system (septic-pumped)This system provides limited treatment onsite, where wastewater is stored until a contractor or authority collectsit. The wastewater is transported to a remote location for treatment. With this system there is:70% chance that individuals will not get sick, and the system is able to have a positive effect on the environment 80% of the time.

Reticulated systemThis is a communal system where all installations directly discharge to a reticulated wastewater treatmentsystem. With this system there is a:98% chance that individuals will not get sick, and the system is able to have a positive effect on the environment 95% of the time.

Fig. 1. Description of the three potential wastewater systems developed from a technical perspective.

Each session began with an introductionaddressing the current issues surrounding waste-water systems in small rural towns, followed byan example of a CM exercise. Participants werethen asked to freely discuss the issues that theyfelt important when deciding whether and how toimprove their current wastewater system. Wherean attribute was raised, participants were thenpressed to discuss the likely range of that attri-bute. For example, after the price of an improvedwastewater system was mentioned as being asignificant factor, participants were asked tosuggest what price they would be prepared to payto remedy the current wastewater situation. Likethe technical experts employed for this project,many residents endeavoured to approach the taskof assigning a price level from a cost perspective.Only by resisting pleas for information to extracta cost were participants ultimately forced intorevealing the likely range of what they regardedas a fair price.

The focus sessions also revealed the difficultyof describing the price attribute consistently. It iscommon practice for new water and wastewaterinfrastructure to attract an up-front payment and

on-going annual contributions from residents.Varying the ratio between these would make itdifficult to gain a consistent estimate of thewillingness to pay. The two main issues of con-cern were varying discount rates between con-sumers and the knowledge, by some in the focussessions, that the government had previouslycapped the up-front contribution that could beapplied by RUWAs to $800. In light of thesedifficulties, it was decided that a simple annualpayment for the service would provide the mostreliable empirical estimate of willingness to pay.The most common lower and upper limits for thisattribute suggested by participants in the focussessions was $100–$700.

It also became apparent during the focussessions that the wastewater system attributesuggested by the technical group would not beeffective in capturing the pertinent part-worthutilities from a consumer’s perspective. The prob-lems with this attribute were threefold. Firstly,whilst the technical group had emphasised theenvironmental and human health impacts of eachsystem, focus group participants universally con-sidered the problem to be related solely to


environmental health. That is, human health wasnot considered to be affected by the status quo,and suggesting so in the choice sets may under-mine the realism of the experiment from theconsumers’ perspective. (This should not betaken to imply that there is no impact on humanhealth pertaining to the present methods of deal-ing with wastewater systems.) The second prob-lem with this attribute was that it invariablycaused respondents to consider the technicalintricacies of application in each household ratherthan the bundle of benefits that might be realisedfrom adoption. Thirdly, participants in the focussessions were clearly inclined to consider higherorder attributes that went beyond the descriptionsdeveloped by the technical group. Each of theseattributes is briefly discussed below.

4.3. Specifying attributes and levels

Four attributes for inclusion in the choiceexperiment were ultimately identified from theconsumer focus sessions. These include price(described above), environmental improvement,subdivision potential, and on-going personalresponsibilities to maintain the optimality of thesystem.

4.3.1. Environmental improvementIt became apparent that the impact of waste-

water services on human health was not an areaof great concern for residents. This can be attri-buted to the fact that, to their knowledge, therewere no cases of individuals becoming ill fromthe current wastewater discharges. However,environmental concern was evident. As one par-ticipant summarised it: “That’s rubbish —nobody around here has ever been sick fromwastewater. Yes, I can see that it’s spoiling ourenvironment but it hasn’t harmed any of us.”

4.3.2. SubdivisionWithout sewerage infrastructure the potential

for residential subdivision is reduced in severalrural towns. This was identified by some parti-cipants as an important consideration in theirdecision to purchase wastewater systems. Whilstnot unanimous across all focus sessions, therewas sufficient commentary in most to indicate aprima facie case for including this variable in thechoice sets. As some respondents put it: “Thisplace would really take off if we had seweragebecause we are so close to town”. “There areplenty of people just waiting for sewerage tocome so they can subdivide”.

4.3.3. On-going responsibilities and requiredmaintenance

All focus sessions indicated that one of theprimary motivations for purchasing a wastewaterservice was that residents could shift responsi-bility, along with maintenance expenditures, toothers. Participants accepted that in order tofunction at an optimal level, alternative systemsrequired varying degrees of time, cost, and effortafter installation on the part of the householder.As two respondents noted: “What I want to knowis can I push the button and forget about it?”“Will I have to worry that others are not doing

Table 2List of attributes and levels to be used in CM ofwastewater services in rural Victoria

Attribute Levels and coding

Price (annual payment) $100; $300; $500; $700Environmental improvement(% positive change fromstatus quo)

50%; 65%; 80%; 98%

Subdivision potential:(approval possible)

Yes = 1; No = 0

On-going householderresponsibility: (% ofresponsibility retained byhouseholders to ensureoptimal performance)

10%; 30%; 50%; 70%


their bit on their property to make the thingwork?”

Whilst there are clearly two dimensions to thisissue, it was the opinion of most in the focusgroups that they were not sufficiently inde-pendent to warrant separation. Again, participantssuggested that a percentage metric would ade-quately describe the extent to which they wouldbe responsible for maintaining the adequate func-tioning of the wastewater system.

The list of attributes and levels derived fromthis phase of the study are presented in Table 2.

5. Conclusions

What has euphemistically been referred to as“wastewater” has unequivocally assumed newstatus as water scarcity becomes increasingly cri-tical in Australia. Increasing demand and limitedwater supply are arguably driving a wider accep-tance of the need to adopt a holistic approach tothe management of the resource. Moreover, thisis evident in legislative and administrativearrangements that are giving greater credence toefforts to deploy urban wastewater to alternativeuses.

To date, much of the analysis of water reusehas focussed on the technical dimensions of theproblem supported by some limited economicanalyses. This second genre of research has cen-tred mostly on larger urban reuse schemes andtended to employ a relatively narrow or localiseddefinition of reuse. Smaller urban communitieshave been largely overlooked in this debatealthough a truly integrated view would acknowl-edge that wastewater from such communities canbe reused by others only if the quality of waste-water is addressed.

In Victoria, urban wastewater for small townsis under scrutiny, partly as a consequence of thelatest reform measures articulated in the WhitePaper. However, improving wastewater treatmentfrom small rural towns is likely to prove proble-

matic, and this is exacerbated by the lack of datapertaining to the preferences of residents in thesetowns.

An opportunity exists to improve our under-standing in this area by using a conjoint techniqueknown as CM to discover the trade-offs indi-viduals are willing to make to achieve a welfareimprovement. To date, this study has revealednon-trivial differences in the attributes deemed tobe important from a technical perspective to thosethat are relevant from a consumer perspective.Applying this information to a choice experimentwill ultimately provide an empirical estimate ofthe relative value of each of these attributes toconsumers, and potentially lead to improvedpolicy decisions in this context. This phase wasproposed for late 2004, providing timely adviceto policymakers.

Acknowledgements

This research was funded by the VictorianUtility Advocacy Centre.

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using choice modelling to reveal waste water preferences in regional victoria

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