Household Willingness to Pay for Improved Water Service in Bahir Dar Town of Amhara Regional State: The Application of Stated and Revealed Preference Methods.
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Date
2010-06
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A.A.U.
Abstract
Adequacy and quality are crucial for household water supply. One of the major problems with
public utilities such as drinking water in developing countries is intermittent, insufficient and
unreliable supply. Bahir Dar is no exception to this. To combat these problems, household
engage in a variety of averting behaviors. Some of the major strategies are storing, treating and
purchasing The study uses the combination of contingent valuation and averting expenditure
approaches to examine the relationship between selected socio-economic characteristics of
household and their willingness to pay for the improved water service and for water quality
improvement A single bounded close endedfollowed by open ended question was used to obtain
Household's WTP for the improved water service. The study used survey data Fom 246
Household randomly selected Fom Bahir Dar town and the Probit, OLS and Multinomial Logit
regression technique was used to estimate the effects of selected exogenous variables on
willingness to pay. The survey result also shows that mean willingness to pay for one bucket or
for 20 liter of improved water service is 14.21 and 14.96 cents according to the dichotomous
choice and open-ended survey responses respectively. The total willingness to pay for one bucket
or 20 liters of improved water services is Birr 4,160.52 per day or Birr 1,518,588.41 per year.
The results of the econometrics model show that household income, quality and type of water
source, children age less than or equal to three and level of education, and age of the head of
the household are the principal factors influencing willingness. This suggests· ihat, any
government policy which increases factors that will increase household's willingness will
increase their willingness to pay. In addition, because consumers ' income is associated with
their willingness to pay, it is suggested that policy on user fees recognize income inequalities
when determining the amount that household should pay.
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Keywords
of Amhara Regional State, The Application of Stated and Revealed Preference Methods.