Water regulation in Scotland
This programme is funded by the Organisation for Economic Co-operation and Development (OECD) and the Water Industry Commission for Scotland (WICS). It is a multi-stage project that will inform a strategic review of the water industry in Scotland.
We are conducting our experiments both online with large samples of Scottish consumers and also in controlled laboratory settings, to ensure the robustness of our findings.
The first and second research studies are complete. We investigated the response of consumers to alternative charging trajectories. We tested how sympathetic people are to price increases, differences between increases expressed in percentage format rather than monetary amounts, and whether consumers prefer annual increases to be concentrated in the first few years of a six-year planning period, spread evenly across the period, or focused at the end of the period. We also investigated how consumers make trade-offs between various water services and their associated charges, and what factors influence these trade-offs. We found, using novel methodology that requires participants to make these trade-offs explicitly, that preferences for services are not sensitive to the costs of different improvements but are sensitive to the lengths of time improvements take to be made. People are increasingly accepting of price rises when information about costs and timings of improvements is provided.
A third research study is currently in preparation that will consider preferences for risk mitigation in water services.