Defining triangulation and willingness to pay in the water sector

We commissioned two studies to look at how water companies can improve their willingness to pay research and use triangulation techniques in their business planning.

Improving willingness to pay in the water sector

In the first study ICF, in association with Economics for the Environment Consultancy (eftec), examined how stated preference (SP) and revealed preference (RP) techniques could be used alongside other research methods to improve willingness to pay (WTP) evidence in the water sector.

The study aimed to support water companies in their efforts to improve their WTP research and how they use it in business planning.

Key findings include:

  • Stated preference (SP) surveys can still be a valid technique for measuring and understanding customers’ preferences and the value they place on water and wastewater services.
  • Stated preference should not be the only technique used: surveys should be undertaken alongside other research methods to achieve a broader and more detailed picture of customers’ preferences.
  • Revealed preference (RP) research can help us understand customer choices and behaviour, but has limits in a largely monopoly sector.
  • Qualitative research and piloting should be used to test research attributes and materials.
  • ‘Willingness to pay’ (WTP) research can be used to evaluate customers’ trade offs between long-term and short-term service and price choices.
    • It should be transparent to participants and stakeholders how the research results will be used.
  • WTP research can be used to set Outcome Delivery Incentives, but only if this is an objective set at the planning stage.
  • As customers’ preferences and values can change over time and be influenced by many factors, WTP research should be an ongoing process (not just at price reviews) to enable companies to track customers’ values over time.

Defining and applying triangulation in the water sector

This study by ICF aimed to identify how water companies can use ‘triangulation’ to build a wider and more in-depth customer evidence base. Triangulation means drawing evidence from multiple sources of data and research to generate new perspectives and insight that will enable the companies to understand their customers better.

Key findings include:

  • Triangulation (in some form) is already widely used in the water sector.
  • There are many types of triangulation that can be applied when carrying out customer engagement in the water sector.
  • Triangulation should be used as an ongoing strategic tool, not simply as a check at the end of engagement programme.
  • The process of applying triangulation techniques should be clear and transparent in order to avoid confirmation bias.
  • The report also includes a suggested framework for water companies to consider when planning to use triangulation in their engagement programmes as part of the 2019 Price Review