Defensive spending on tap water substitutes: the value of reducing perceived health risks
Journal of Water and Health
We examine factors that explain consumer spending on tap water substitutes using information from a national survey undertaken with a representative set of Canadian respondents. We develop a model to predict the percentage of households that undertake such spending for the purpose of reducing perceived health risks from tap water consumption. Using results from the model we estimate the magnitude of defensive expenditures to be over half a billion dollars (2010 US$) per year for Canada, as a
... le. This is equivalent to approximately $48 per household per year or about $19 per person per year. Residents of Ontario, the province in which an Escherichia coli incident took place in 2000, have the highest willingness-to-pay of approximately $60 per household per year. taste, others may do so because they perceive bottled water/ filtered tap water to be safer than water straight from the tap. Doria et al. () find that tap water consumption is influenced negatively by risk perceptions of poor quality. Statistics Canada () reports that 43% of respondents who treat their tap water prior to use with some form of home filtration device do so in order to remove possible bacterial contamination; 40% say it is to remove metals or minerals, and 51% indicate they do so to remove water treatment chemicals such as chlorine. Common home filtration devices are marketed as providing water that is free from impurities by removing contaminants that may be bad for a person's health. To the extent that discretionary expenditures on tap water substitutes are defensive in naturethat is, they are intended to provide protection to the purchaserthey reveal a willingness to commit one's own resources in order to achieve reductions in one's own perceived health risks from tap water consumption.