ABSTRACT
This paper reports results from a contingent valuation study of households’ willingness-to-pay to prevent uncertain, future nitrate contamination of a potable supply of groundwater. The functional form of the corresponding logit model is derived from utility maximization theory. Probability of future demand, change in the probability of future supply, and an attitudinal score for interests in the well-being of future generations are significant, positive determinants of option prices. Several implications of these results for aquifer management policy are highlighted.
