Households Willingness to Pay for Improved Water Supply Services in Addis Ababa City.
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Date
2019-06
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Addis Ababa University
Abstract
The major objective of this study is to estimate household willingness to pay for improved
sustainable water supply services, and to investigate its determinants in Addis Ababa city
of Ethiopia, by using contingent valuation method with a single bounded elicitation
format followed by open ended questions. A total of 375 randomly selected sample
households were interviewed, both probit and linear regression of ordinary list square
model were used to analyze the determinants of households willingness to pay for
improvement of water supply services and A mean willingness to pay is found to be 2.78
birr per one bucket or 20 liter of jerican in the probit result and mean willingness to pay
2.01 birr in the open ended format result. Household’s monthly income, sex of household
head, family size of household and reliability of water services have positive and
significant effects on willingness to pay for improved water supply services in the probit
model. On the other hand, initial bid price and age of house hold head have negative and
significant effect on the probability of willingness to pay for improved water supply
services. The contingent valuation survey result revealed that 323(86.1%) of household
heads were found willing to pay additional fee for improved water services. This implies
that if proposed water improvement scheme is implemented, in addition to satisfying the
water needs of households of the city’s utility management can collect more revenue from
the sale of improvement water. If provision of improved water supply service will applied
to the city of Addis Ababa water and sanitation authority will collect 286,693,205.50 birr
additional revenue. Therefore, the concerned body needs to take in to consideration the
socio economic and demographic factors like sex, age, marital status, income,
educational status and marital status in designing the improved water supply system of
the city.
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Keywords
Willingness to pay, Contingent valuation method, improved water Supply services, Household heads, Addis Ababa