In this paper, we examine the impact of poor water quality on avoidance behavior by estimating the
change in bottled water purchases in response to drinking water violations. Using data from a national
grocery chain matched with water quality violations, we find an increase in bottled water sales of 22
percent from violations due to microorganisms and 17 percent from violations due to elements and
chemicals. Back-of-the envelope calculations yield costs of avoidance behavior at roughly $60 million
for all nationwide violations in 2005, which likely reflects a significant understatement of the total
willingness to pay to eliminate violations.