Non-residential demand for recycled water for outdoor use in a groundwater constrained environment

Many parts of the world, including Australia, are facing acute groundwater shortages. Recycled wastewater is emerging as an important alternative, sustainable, substitute for groundwater. However, before water utilities can invest in water recycling projects, they need information on the demand for recycled water. A comprehensive literature search revealed no study reporting a price elasticity estimate for recycled water for outdoor use by large non-residential users. This paper contributes to this knowledge gap by conducting a case study in Perth, Western Australia. Using a contingent behaviour method, we find that the price elasticity varies between -0.76 and -0.97, depending on the extent of restriction placed on access to groundwater. Using a contingent valuation method, we estimate the willingness-to-pay for recycled water for outdoor use, by a representative organisation to be $AUD112/ML. We also find that the willingness-to-pay for recycled water varies with land use type, with agriculture and horticulture the sector with the highest willingness-to-pay.