costs of the asset over time. These costs
include the utility’s internal costs to repair
or replace the asset, plus the external costs
incurred by customers when the asset
performs below expected service levels.
Although internal costs, or the utility’s out-of-pocket expenses to repair or replace an
asset are easy to determine, external costs
to customers are harder to quantify.
An economic valuation survey was
conducted of the residential customers of
the Albuquerque Bernalillo County Water
Utility Authority (ABCWUA) to inform
decision makers on a water pipe renewal
investment project. Various service levels
were presented in the survey to represent
water pipe renewal investments and the
associated service levels. The survey asked
for residential customer preferences for
outage frequency, outage length of time,
time for advance notification, and costs that
customers would be willing to pay to prevent
certain scenarios. These costs represent a
portion of the social costs that are input to
the total life cycle costs of assets.
Economic valuation surveys can also
be used to help water utilities prioritize
funding between various asset investment
options. The survey can quantify customer
willingness-to-pay for changes in service
levels associated with different investment
scenarios for different service attributes.
For example, Yorkshire Water used data
from an economic valuation survey to
prioritize different investment scenarios.
The survey was designed to quantify
willingness-to-pay for changes in various
service factors (i.e., security of water
supply, drinking water quality, inadequate
mains pressure) and resulting improved
levels of service associated with the
investment scenarios affecting the service
factors. The survey data was incorporated
into an economic optimization program
that facilitated evaluation of different
investment scenarios, and allowed for user-defined levels of risk, cost, and service.
The research report is written as a user-friendly handbook for water utilities on how
to conduct their own economic valuation
surveys. The report provides the basic tools
for water utilities to understand how to
design, implement, and analyze economic
valuation surveys. The customer survey
that was administered for the ABCWUA
is presented as a detailed case study to
illustrate the development of survey
questions, administration of the survey,
and interpretation of the survey results.