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Households’ Willingness to Pay for Improved Water Supply: Application of the Contingent Valuation Method; Evidence from Jigjiga Town, Ethiopia

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  • Shemelis Kebede Hundie
  • Lamessa Tariku Abdisa

Abstract

Water problem in developing countries like Ethiopia is twofold: low coverage levels and poor quality that require urgent attention to reduce associated health and social consequences. Understanding this fact, the government and NGOs are currently carrying out several activities to improve the coverage and quality of water supply. To this end, willingness to pay of households that are expected to be benefited from the project should be analysed. The central objective of this study is, hence, to estimate Willingness to Pay (WTP) of households for better-quality water service provision and identify its determinants by using Contingent Valuation Method (CVM) in Jigjiga city. We estimate Willingness to Pay (WTP) for better quality of water supply service on cross-sectional survey of households in Jigjiga city taking 210 sample households randomly drawn. The highest relative WTP for improved water supply service was found in the city with the highest percentage of respondents being unsatisfied with the current water supply both in terms of quality and quantity. Response to the hypothetical scenario shown that sampled households stated that their mean WTP of 94 cents per 20 litres. The results of logit model revealed that household income, family size, water source, age of the respondent and bid value have significant effects on WTP for improved water service provision. The implication is that it is better take into account the socio-economic characteristics of the households in planning and designing water supply projects, which may serve to set rigorous demand oriented projects that can sustain the service delivery.

Suggested Citation

  • Shemelis Kebede Hundie & Lamessa Tariku Abdisa, 2016. "Households’ Willingness to Pay for Improved Water Supply: Application of the Contingent Valuation Method; Evidence from Jigjiga Town, Ethiopia," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 19(62), pages 191-214, December.
    • Handle: RePEc:rej:journl:v:19:y:2016:i:62:p:191-214
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    References listed on IDEAS

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    1. Kanninen Barbara J., 1995. "Bias in Discrete Response Contingent Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 28(1), pages 114-125, January.
    2. Mirajul Haq & Usman Mustafa & Iftikhar Ahmad, 2007. "Household s Willingness to Pay for Safe Drinking Water: A Case Study of Abbottabad District," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 1137-1153.
    3. Richard Carson & Nicholas Flores & Norman Meade, 2001. "Contingent Valuation: Controversies and Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(2), pages 173-210, June.
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    More about this item

    Keywords

    Willingness to Pay; Contingent Valuation Method; Improved Water Service; Jigjiga;
    All these keywords.

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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