Many studies also try to estimate how much various water users are willing to pay or receive for utilizing and managing water resources in their communities. In Africa, Payment for Watershed Services (PWS) schemes is reported to be uncommon even in the irrigated agricultural sector, which accounts for 86% of water withdrawals on average in the continent (Ferraro, 2010). Ferraro (2010) review of studies notes that Latin America receives more PWS initiatives than Africa. The analysis stated myriad of factors which make PWS schemes less attractive in Africa than in Latin America. Therefore, in the agricultural sector, less irrigation-driven PWS schemes in Latin America predict the unlikelihood of African irrigation-driven PWS schemes to be widespread soon.
Groundwater is the largest water freshwater source on this planet (~97). Globally, nearly 25% of the world’s population benefit from groundwater in one way or the other especially for agricultural production and domestic water use (Brooks et al. 2014). In the United States, groundwater contributes to almost 33% of public water supply (Brooks et al. 2014). However, groundwater tends to be less value due to some underlying factors than surface water supply in various areas of the world. For example, some Indian farmers in a study area value groundwater supply less for producing their staple food (rice) than surface water supply (Hellegers & Davidson 2010). Similarly, some farmers in Jordan equally underestimate groundwater and are willing to pay only two and a half times the current water price (Salman & Al-Karablieh 2004). Vo & Huynh (2017) recently presents some underlying factors that explain the underestimation of groundwater in terms of people’s WTP. First, they note that the demand for groundwater decreases as household income increases in their study region in Vietnam (Vo & Huynh 2017). This is in line with several studies conducted in the least developed countries which consider income as a significant determinant of households’ WTP (Abramson et. al. 2011). Vo & Huynh (2017) study adds that the economic values of households’ WTP for groundwater are highly sensitive to gender, awareness of the environmental issue, and health risk concerns of consuming unprotected groundwater. For instance, a male household head is willing to offer 3 times more than a female household head in a study region in Vietnam (Vo & Huynh 2017).
Studies estimate farmers’ WTP for improved water supply and use of recycled water for crop irrigation in Europe (Bakopoulou, Polyzos, & Kungolos, 2007; Mesa-Juradoa et. al. 2012). For instance, in the South of Spain farmers are willing to increase more than 10% and 20% of their current irrigators’ community annual payment and decrease by 33% their administrative water allocation concession for securing future guarantees. In a predominantly agrarian area of Greece, about 57.9% of farmers express WTP 50% of the freshwater price to purchase recycled water for irrigating their crops. However, with access to freshwater, 33.6% of farmers mainly high-income earners would not pay for recycled water for crop irrigation. But without access to freshwater supply, the same rich farmers would be willing to pay a bit more for recycled water compared to freshwater prices. (Bakopoulou, Polyzos, & Kungolos, 2007). Two other studies (Yokwe 2009; Hellegers & Davidson 2010) investigate the disaggregated economic value of irrigation water by crop, region, and season in South Africa and India. Both report a significant variation of irrigation water value across crops, areas, and seasons. For instance, both studies find that the economic water value derived from growing vegetables in extremely higher than from growing groundnut in the wet season in India and higher than growing dry maize in South Africa.
Water Value for Instream & Recreational Uses
Water valuation also includes estimating the instream recreational uses of water which directly and indirectly benefits people in various regions of the world. Olmstead (2010) review of the literature shows that several studies used CVM to investigate the economic value to local populations for restoring or increasing water flows in dry or degraded rivers. In general, these studies indicate that local populations have expressed significant WTP for increasing or restoring water flows. For instance, the WTP for flow restoration included the following rivers; the Yaqui River in Sonora, Mexico, the Little Tennessee River in North Carolina, the Platte River near Denver in Colorado, the Ejina River in China, and the Sultan Marshes in Turkey. Besides, Olmstead (2010) reports that studies using hedonic housing method in the United States show that homeowners in arid regions have a substantial WTP for being close to healthy riparian ecosystems.
Olmstead (2010) further highlights that the economic benefit of instream water for recreational fishing varies across space and by season. Review of studies conducted in the United States indicates that the marginal value of water for downstream and local fishing is higher than the marginal value of water for irrigation in 51 of the 67 river basins with substantial irrigation system. However, the values/benefits are massive in the arid Southwest, where the marginal changes impact on fishing in streamflow are highest (Olmstead, 2010).
Some studies estimate the overall value of various recreational benefits from increasing instream flow. For instance, a study conducted in California shows that increasing water supplies to 14 wildlife management areas would enhance wildlife viewing, fishing, and waterfowl hunting. The expected benefits from this flow increase are reported to exceed the marginal value of water for agriculture in the same area for the same period. In addition, individuals are said to hold significant value for maintaining surface water flow which supports endangered species habitat (Olmstead, 2010).
Other studies focusing on the marginal value of additional instream flows for white water rafting indicate that recreational rafters have less value for additional increments when flows are sufficient to allow rafting. However, when flows are low or inadequate, recreational rafters earn substantial value for additional units of flow (Olmstead, 2010).
There are underlying factors responsible for the change in instream flow. These mainly include deforestation and land use change (Olmstead, 2010). For instance, a study conducted in Indonesia indicates that the preservation of forests in Manggarai province increases baseflow and enhance agricultural production. This results in a positive and significant elasticity of agricultural profits, especially for rice and coffee production. On the other hand, urban sprawl and urban development are said to have negative effects on groundwater recharge, which increases urban areas vulnerability to drought (Olmstead, 2010).