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Please use this identifier to cite or link to this item: http://hdl.handle.net/123456789/1034

Advisors: Dr Tekie Alemu
Copyright: 2003
Date Added: 9-May-2008
Publisher: Addis Ababa University
Abstract: Many developing are experiencing rapid urbanization in human settlements, at the same time, available fresh water supplies continue to decline. Recognizing the harm to health, economic productivity, and quality of life that can result from inadequate services, international donors and governments of developing countries have mounted numerous efforts to avert this problem. So far, the strategies of these organizations have been supply oriented, totally ignoring the importance of demand in the selection of appropriate policies. Hence, it is necessary to undertake a study on the demand side, which will depicts the needs of the consumers and whether they are willing to pay for such services.The study used the Contingency Valuation Method with a checklist format and bidding game to analyse households’ Willingness To Pay for improved water services in Makeni, and to determine the appropriateness of the existing government policy in relation to water supply and draw up appropriate policy implications and recommendations based on the findings.Descriptive analysis of survey findings reveals that households in Makeni are willing to pay less than the previously existing tariff. Despite this, the aggregate WTP value per month is Le14 million (approximately US$7000) and this amount is almost ten times greater than the previously realised monthly figure. The results further reveal that starting point bias affects the final willingness to pay bids of the respondents. The multivariate analysis used the Heckman selection model. The probit results indicate that responsibility for water management, water quality and income produce the largest marginal effects. The OLS results depict that willingness to pay is positively related to income, education and water quality while it is negatively related to the age of the respondent and responsibility. However, since the contingent valuation method is hypothetical, the estimated values should be regarded as approximations and that the actual behaviour of the households can only be gauged when the improved water system is reintroduced.
Description: A Thesis Submitted to the School of Graduate Studies of Addis Ababa University in Partial Fulfilment of the Requirements for the Degree of Master of Science in Economic Policy Analysis
URI: http://hdl.handle.net/123456789/1034
Appears in:Thesis - Economics

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