While seawater desalination technologies can improve drinking water supply, they can also generate significant environmental externalities. A choice experiment was implemented to investigate household preferences for potential trade-offs between improved water services and environmental impacts from seawater desalination in the Galápagos Islands. Our results indicate that households are willing to pay for water quality improvements, and for protection of coastal ecosystems and marine organisms. In contrast, households seem indifferent regarding water availability and potential impacts on air quality. Our findings also suggest that respondents who consistently reject the proposed desalination project tend to be less affluent and have stronger environmental preferences than those who support it. It is concluded that stated-preference studies on improved water services should also elicit preferences for potential environmental effects of the proposed water technology.