Valuing Environmental Services Provided by Local Stormwater Management

Abstract

Decentralized stormwater management systems deliver a number of environmental services that go beyond the reduction of flood risk, which has been the focus of conventional stormwater systems. Not all of these services may be equally valued by the public, however. This paper estimates households’ willingness to pay (WTP) for improvements in water security, stream health, amenity values, as well as the reduction in flood risk and urban heat island effect. We use data from nearly 1,000 personal interviews with residential homeowners in Melbourne and Sydney, Australia. Our results suggest that the WTP for the highest levels of all environmental services is A$409 per household per year. WTP is mainly driven by the residents’ positive valuation for exemptions in water restrictions, improvements in local stream health, and decreased peak urban temperatures. We further conduct a benefit transfer analysis and find that the WTP is not significantly different between the study areas. Our findings provide additional support that decentralized stormwater management systems have large nonmarket benefits and that, under certain conditions, benefit values can be transferred to different locations.