Options Prices for Groundwater Protection
Edwards, S.F.
Journal of Environmental Economics and Management, Vol. 15, pp. 475-487, 1988 WHOI-R-88-012
This paper reports results from a contingent valuation study of households’ willingness to pay to prevent uncertain, future nitrate contamination of a portable supply of groundwater. Probability of future demand, change in the probability of future supply, and an attitudinal score for interests in the well- being of future generations are significant, positive determinants of option prices. Several implications of these results for aquifer management policy are highlighted in the paper.