Subjective vs. objective measures in the valuation of water quality

• We study differences between perceived and objective water quality measures.
• We find several factors to influence the divergence and its direction using models.
• Quality perceptions at extreme quality conditions differ from the objective.
• The public can provide fairly reliable information on water quality.

Environmental valuation studies rely on accurate descriptions of the current environmental state and its change. Valuation scenario can be based on objective quality measures described to respondents, on individual subjective perceptions or their combination. If subjective perceptions differ systematically from objective measures, valuation results may be biased. We examine the factors underlying the divergence between perceptions of water quality among summer house owners and the objective water quality classification. We use bivariate probit and multinomial logit models to identify factors that explain both the divergence between perceived and objectively measured water quality and its direction, paying special attention to variables essential in valuation, including those describing the respondent, the summer house and the water body. Some 50% of the respondents perceive water quality differently from the objective quality measures. Several factors are identified behind systematic differences between the perceived and objectively measured quality, in particular the water body type, the level of the objective quality classification and the travel distance to the site. The results emphasize the need to take individual perceptions into account in addition to objective measures in valuation studies, especially if the environmental quality of the study area differs considerably from the average quality in general.