**2.2 Questionnaire design**

264 Current Issues of Water Management

 Pr=Pr[Y\*(Q0,Q1,U0,S)-T>u] (3) Where Y\* is observable component, u is observable random component, as shown in

 Y(Q0,Q1,U0,S)=Y\*(Q0,Q1,U0,S)+u (4) The Bidding Function can be estimated based on the probit model by Cameron &

> Pr(Ii=1) Pr(Yi>Ti) Pr(ui>TI-Xi'B) Pr(ui / (TI-Xi'B) / )

where Xi′B is exclaiming variable, φ is accumulated probability of intensity function, then

Pr(Ii=1) Pr(Yi>0i) Pr(ui>-wi' )

Yi = wi′δ + ui

⎦ <sup>⎤</sup> <sup>⎢</sup> ⎣ ⎡−

= -wi′δ

σ

/ /1 *B*

δ\* = (α,γ) =(-1/σ,B/σ)

B -/ - Yi Xi'B

= γ α = 1/α =

∗

σ

σ

= = δ

 Pr(zi>-wi' / v) 1- (-wi' / v)


= δ =φ δ

= σ> σ

(5)

Yi = Xi′B+ui (6)

(7)

= =

=φ σ

1- ((Ti-Xi'B/ )

the interviewee's bidding valuation can be shown as formula (6) :

Yet standard binary probit model shall be

using the following transformation

the probability for the interviewee to check this bid can be expressed by formula (3):

Formula (4):

Ii=1 if Yi >Ti = 0 otherwise

Ii=1 if Yi>0 =0 otherwise

at this time,

we obtain

James(1987) as shown below:

To the demand end, quality and price of the reclaimed water are the major concern. We detail as follows: Water reclaimed from effluent of large scale wastewater treatment plant by reverse osmosis: capable of reaching quality standard of Taiwan Water Works. For the selection of questionnaire valuation method, the study employs the most easy-to-operate and time saving "Single-bounded dichotomous choice elicitation method" (Boyle & Bishop, 1988) to carry out interviews based on NOAA suggestions.

The scenario of this study is as follow: We assumption that "the government guarantees that quality of reclaimed water conforms with city water specifications, no interruption of supply 365 days a year with assured quality and loss indemnification on supply interruption," and that "dedicated pipeline to be installed for reclaimed water delivery, plus with free-of-charge pipe connection," and that "50% deduction on wastewater treatment charge if total consumption of reclaimed water exceeds 40% of total industrial water consumption of the company". Than we ask the manager or boss of the factory " Are you willing to pay for the reclaimed water for the "T" price we suggested on the questionnaire1 under the assumption scenario?"

The value of reclaimed water depends on its water quality. The quality of "city water" is just the basic requirement of the customer when comparing with more expensive and better quality of "soft water, 1μS/cm". Besides, the assumptions of the following are not yet done but they are the requests of the factories. So we set up the approximate realistic assumption of the scenario.

The selection of the price we suggested on the questionnaire, i.e. "T" in formula(2) in each questionnaire of the scenario is determined based on the current city water price in Taiwan and the costs for reclaiming the wastewater. Furthermore, one or several extreme and median values are set to meet theoretical requirements of the Contingent Valuation Method, the scenario having 12 kinds of "T" prices as shown in Table 1. In another word, the study employs 12 different questionnaires, QA through QL, with different assignment of the "T" prices for each type of questionnaires scenario.

 1 we give different "T" price in different type of questionnaires which shows on Table1.

The Willingness to Pay of Industrial Water Users for Reclaimed Water in Taiwan 267

Questionnaire via fax or mail is adopted for the survey. Every returned questionnaire is checked for completion; in case of miss or obvious mistake of key items, a telephone recheck will be made against the particular factory. For factories that fail to return the questionnaire, urging telephone calls will be made. The study sends out a total of 205 questionnaires and receives 47 returns of which 2 are null; the return ratio is 22.93%. Table 3 shows questionnaire distribution of the sampling zone. For further understanding of the scenario, Table 3 is compiled to statistically manifest the WTP selected for the scenario, and the percentage of factories that are willing to use the reclaimed water at different WTPs

Scenario A B C D E F G H I J K L

Scenario Return Count 3 7 3 3 4 4 1 6 4 6 2 2

Total number of questionnaire 29 29 29 29 29 29 29 29 29 29 29 28 Note: Data of null questionnaires are not included in this table. Unit of T: NT\$/ton. Ratio of Willingness

For empirical analysis of factories' Willingness to Pay (WTP), the study employs the valuation method developed by Cameron & James (1987) and Cameron (1988) using the software called LIMDEP. In order to avoid influences from extreme sample values, Logit Model is used to establish the valuation formula of WTP (Willingness to Pay); Approximation of Newton's method and maximum likelihood estimation (MLE) are used to evaluate the WTP; accuracy of the prediction exceeds 75% although the number of sample is

> WTP of factories (NT\$/ton) 13.97 Accuracy of the prediction model 82.22%

Under the assumption that "the government guarantees that quality of reclaimed water conforms with city water specifications, no interruption of supply 365 days a year with assured quality and loss indemnification on supply interruption," and that "dedicated pipeline to be installed for reclaimed water delivery, plus with free-of-charge pipe connection," and that "50% deduction on wastewater treatment charge if total consumption of reclaimed water exceeds 40% of total industrial water consumption of the company", factories are willing to purchase the reclaimed water at an average price of 0.48\$/ton (13.97NT/ ton), reclaimed water demand is 131,000 Cubic Meter per Day (CMD2), 22.8% of factories in the sampling zone are willing to use reclaimed water, and a ratio of 47% of the

Scenario

T price 3 5 7 9 11 12 13 15 16 18 20 24

Ratio of Willingness 67 71 33 67 75 50 0 33 50 33 0 0

corresponding to respective questionnaires of the study.

Table 3. Return ratio of difference type of questionnaires

Note: The estimation models are under the 0.5% significant level

2 Cubic Meter per Day (CMD) is the flow rate of water

small. Table 4 shows results of WTP:

Table 4. Results of WTP of factories

Questionnaire No

is in %.

**3. Results** 


Table 1. The price "T" we suggested on the questionnaire (in NT\$/ton)
