Valuing Water Supply Service Improvements in Addis Ababa
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Date
2007-03
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A.A.U
Abstract
Using The Contingent Valuation Method (CV M) the study sets out to analyze determinants of households ' WTP,
estimate total 'W'TP, and derive aggregate demand and aggregate benefit for improved water supply service. the
study used cross –sectional data collected From 240 households in Addis Ababa, the capital city of Ethiopia through
closed-ended Value elicitation Format with open-ended follow up questions. The empirical models adopted by this
Study are Probit and tobit models. The tobit Models is used to identify socio-Economic Factors that affects the WTP Of
households and to estimate Aggregate demand and aggregate benefits For the Proposed 'improvement Water Supply
Service. The Profit model is used to calculate the Mean WTP For the closed-ended format.
Results of the Study reveal that about 38.72% of the respondent reported that they do not have Private tap
connection to the existing system. The majority of the households (83.82%) also indicate that they are not Satisfied
Wife the existing Water Supply Service. the Mean Per capita consumption of water is Fauna to be 37.6 liters Per day
Which is for lower the absolute Minimum UN Standards (50 laced)the Mean WTP values are 15.34 and 20.20
cents Per boldi (a 20 liter bucket) for the improved Water Supply Service as calculated from the to bit and Profit
model respectively The householdsWTP for improved water service is greater than the existing water tariff rate of
the authority. The totalWTP amount from the sample of 126,108 households in Addis Ababa sub-cities was found
to be birr 154, 198.26 Per day
The area under the demand curve represents the gross value of consumers surplus which is Birr 181,935.36 Per day if
water is considered as a Free good but water is an economic good and if a new tariff rate of the authority Proposes
to be 8 cents Per bald the consumers' surplus will be reduced to birr 94,397.85 Per a day. The rest of the benefit is
distributed to the water autliority birr 80,364.96 in the Form of revenue and birr 7,172.55 as a dead Weight loss Per
day.
the to bit model shows that there are s searal explanatory variables that affect the WTP value. Income of the
household Sex.. of the respondent dummy (Female = 1), education (both secondary and tertiary level), households ' Year
of Stay, households not using tank as a Storage, wealth of a households, occupation of the respondent dummy
(employed = 1) I household s satisfaction with the existing service, and location of the study site (Addis ketema) have
Positive and significant effects on 'willingness to Pay. Family size has negative and significant effect on willingness’s
to Pay.
the Policy implication of the study is that the inhabitants of Addis Ababa city are witting to Pay for improved water
supply Service if it is Provided For an affordable Price. In addition, Policymakers need to be aware that socio economic
Characteristics and water use Practices of households influence the willingness to Pay for better water
services.
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Keywords
Addis Ababa., CVM, reliability, supply, water