Determinants of Households’ Willingness to Pay for Improved Water Supply Services in Dilla Town, Southern Ethiopia: An Application of Contingent Valuation Method.
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Date
2014-11
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Addis Ababa University
Abstract
The supply of adequate, quality, and safe drinking water is a basic need for every human being. However, many people particularly in developing nations lack access to quality and adequate water services which affects their life in many different ways. Ethiopia, like many other developing countries, has problems such as budget constraints and trained man power in delivering safe drinking water to its people. Therefore, to satisfy the required quantity and quality of water demand as well as maintaining the sustainability of water improvement projects, the participation of the beneficiaries is found to be important. This research is designed to estimate households’ WTP for improved water services and to identify the potential factors that affect their WTP. To achieve its objective the contingent valuation survey was made using 132 randomly selected households from Dilla town. The data were collected using a well designed questionnaire through single-bound dichotomous choice format followed by open-ended questions. Two econometric models, namely Probit and Tobit models were employed to analyze the data together with descriptive analysis. The result revealed that from the total sampled households 93.94% became willing to pay a positive amount for the water improvement program. The mean WTP for a jerrycan (20 liters) of improved water from both closed-ended and open-ended questions were found to be 18.96 and 21.29 cents respectively. Both values are much higher than the current water tariff of the town. Hence, the 16,501 households’ total willingness to pay is estimated to be birr 10,296 per day or birr 3,758,040 per year which is quite higher than the current estimated total revenue of birr 782,485.25 collected from the water sale by the town’s water supply enterprise.
The findings of this study also revealed that households’ monthly income, source of water being used, occupation, and wealth of respondents positively affect households’ WTP while households’ family size, quality of water being used and bid value offered to the respondents negatively affect WTP for improved water services. Therefore, these variables should be given much emphasis by policy makers or other concerned bodies in the water improvement program of the town.
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Willingness to Pay for Improved Water Supply Services