Nitrate pollution, perceived water quality, drinking water choice and water prices A hybrid choice model
Olivier Beaumais  1, *@  , Romain Crastes-Dit-Sourd  2@  , Paul Veyronnet  3@  
1 : Lieux, Identités, eSpaces, Activités  (LISA)  -  Website
Université Pascal Paoli, Centre National de la Recherche Scientifique : UMR6240
UFR Drittu, Scenzi suciali, ecunòmichi è di gestioni 22, av. Jean Nicoli, BP 52 20250 Corti -  France
2 : Choice modelling center, Institute for Transport Studies, University of Leeds
34-40 University Road, Leeds LS2 9JT -  Royaume-Uni
3 : Centre de Recherche en Economie Appliquée à la Mondialisation  (CREAM)  -  Website
Université de Rouen Normandie : EA4702
3 avenue Pasteur 76186 Rouen Cedex 1 -  France
* : Corresponding author

Using a cross-sectional dataset of about 4,000 individuals, we explore the determinants of drinking water choices in France. More specifically, we focus on the role of the perception of water resource (surface water, ground water) quality measured by the stated level of perceived quality ("very poor", "bad", "good", "very good"). To the extent that the perceived quality of water resources in France varies across individuals, those may adopt averting behavior by purchasing bottled water or by using filtration devices (e.g. filter jugs). However, given that the perceived quality of water resources as a predictor of drinking water choices is an attitudinal variable, it is likely to be endogenous. The same applies to the perceived price difference between bottled water and tap water, which, we argue, is a more relevant predictor than water prices (tap water, filtered water, bottled water) to explain drinking water choices. To control for endogeneity, we use a hybrid choice model that, as a system of structural equations, correctly integrates the perceived quality of water resources and the perceived price difference as latent variables in the discrete decision-making process under study. We show that perceived water quality and, contrary to what is usually argued and found in the literature, perceived price difference, indeed influence drinking water choices.


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