The Value of Improved Water Supply Service in Motta Town,East Gojjam,Ethiopia:Application of Contingent Valuation Method (CVM)
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Date
2011-06
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Addis Ababa University
Abstract
Adequate quality, safe and affordable supply of drinking water is a basic need for human life.
However, many people in LDCs are lacking this safe and quality water. Since Ethiopia is one of these
LDCs its urban and rural area population do not have access to such attributes of water. Therefore
adequacy and quality are crucial for household water supply. In this study the CVM was used to
analyze the determinants of households’ WTP for improved water services by applying the doublebounded
dichotomous choice value elicitation format. The study used cross-sectional data collected
from 220 randomly selected sampled households from Motta town. The CV survey responses were
analyzed through descriptive and econometric analysis using probit, bi- variate probit and Tobit as
empirical models.
The CV survey results revealed that 199 (96.6%) of the respondents were willing to pay a positive
amount for improved water services.
Thus if the proposed water improvement scheme is implemented, in addition to satisfying the water
needs of the households, the town’s utility management can collect more revenue from the sale of
improved water. The CV survey results also show that the mean WTP of households for the proposed
improved water service is between 19.2 cents and 25.83 cents depending on the method used. The total
WTP amount from the total of 10,898 households in Motta town was founded to be birr 8,198.2 per
day or birr 2,992,343 per year which is much higher than the current total revenue of birr 475,325
collected by the utility management .
The results from the test statistics show that existing source of water, initial bid offered to
households, age of the respondents, sex of the respondents and responsible organ for the provision of
improved water services have a negative effect on the probability of households’ WTP for improved
water services in the probit model and at the same time they have also a negative influence on the
maximum amount they are willing to pay in the tobit model. On the other hand education (both
primary, secondary and tertiary), income, wealth, quality of water being used, reliability of the
existing service, years of stay in the town, time taken to fetch water from the existing source and level
of satisfaction with the existing service are affecting positively the probability of accepting the initial
bid offered to them for improved water service and the maximum amount that they are willing to pay.
Therefore the policy makers need to take in to consideration these socio-economic and demographic
factors and some other attributes of water in designing the improved water supply system of the town.
Key Words: Willingness to pay, Contingent valuation method, Improved Water
Service.
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Keywords
Willingness to pay, Contingent valuation method, Improved Water Service