A Hedonic Valuation of Residential Water Services

This paper investigates the economic value of municipal, private, and community-managed water services in Guatemala through a hedonic analysis of rental housing prices observed in 2006. Hedonic models are jointly estimated with water service choices using a maximum simulated likelihood approach in order to control for potential endogeneity. Findings indicate that the value of piped water depends on the type of water utility. The estimated value of municipal services is at least 15 times as much as the average water bill, while value estimates are not significant for private and community-managed systems. Value differentials are discussed considering the performance of water utilities and their institutional arrangements. Copyright 2013, Oxford University Press.