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Household's Valuation of Domestic Water in Indonesia: Revisiting the Supply Driven Approach

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  • Arief Anshory Yusuf
  • Phoebe Koundouri

Abstract

We apply the hedonic analysis on a nation-wide microeconomic dataset of Indonesia. Our results indicate that in urban areas, people value having improved domestic water sources (piped and pump water), while this is not true for households in rural areas. Moreover, households in both urban and rural areas do not seem to value communal water sources, probably reflecting the effects of the free-rider problem, when services have characteristics of public goods. On the whole, our results show that households in rural Indonesia are not willing to pay for improved domestic water sources, which pinpoints a major challenge to the DDA approach. Assuming universal rights for provision of safe and improved water quantities that cover basic needs, subsidization of water provision is still called for.

Suggested Citation

  • Arief Anshory Yusuf & Phoebe Koundouri, 2004. "Household's Valuation of Domestic Water in Indonesia: Revisiting the Supply Driven Approach," DEOS Working Papers 0404, Athens University of Economics and Business.
    • Handle: RePEc:aue:wpaper:0404
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    References listed on IDEAS

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    1. Trawick, Paul, 2003. "Against the Privatization of Water: An Indigenous Model for Improving Existing Laws and Successfully Governing the Commons," World Development, Elsevier, vol. 31(6), pages 977-996, June.
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    1. Eric Nazindigouba KERE & Johanna CHOUMERT & Amandine Loyal LARÉ-DONDARINI, 2014. "The impact of water and sanitation access on housing values: The case of Dapaong, Togo," Working Papers 201403, CERDI.
    2. Yusep Suparman & Henk Folmer & Johan Oud, 2014. "Hedonic price models with omitted variables and measurement errors: a constrained autoregression–structural equation modeling approach with application to urban Indonesia," Journal of Geographical Systems, Springer, vol. 16(1), pages 49-70, January.

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    More about this item

    Keywords

    Household water valuation; supply driven approach;

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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