Estimating the willingness to pay for water services in developing countries: A case study of the use of a contingent valuation survey in El Salvador, Central America
Abstract
The purpose of the present study was to determine willingness to pay for improved water quality and sanitation in four rural communities of El Salvador using the Contingent Valuation Method. The research was conducted between November 1998 and January 1999. Different regression estimates reveal that characteristics of the current water supply and the price of water in the new system, together with socioeconomic features of respondents, are important in explaining consumers' willingness to pay. In fact, those variables related to household income, the price of the service to be provided, along with defensive measures taken by consumers, like water storage, and boiling water are among the most influential. However, other variables, like family size and community involvement in the management of improved water supplies, also proved to be important. All these variables had the expected coefficient signs, and their coefficient estimates were statistically significant at levels between 1% and 15%, indicating that survey results are plausible. Consumers value the reliability first, and then the quality of the service they receive. Also, consumer's willingness to pay is high and comparable to what they are currently expending for their water supplies. The data indicate that WTP for water quality improvements in the four surveyed communities is substantial. Individuals were willing to contribute more than 30% of their overall monthly income for potable water. In other words, potable water was highly valued by the respondents of the survey. Demographic and attitudinal variables offer a number of interesting insights. Willingness to pay increases when the decision-makers are women, and are more likely to be sustainable if there is greater dissatisfaction with traditional water sources. Also WTP is greater when traditional water sources involve a greater opportunity cost (the opportunity cost of the time involving in carrying water) and water supplies are of lower quality. Thus, improved systems are more likely to be sustainable in the future if we take this findings into consideration for the design and management of new potable water projects. The focus of the last part of this study was the financial sustainability of water systems. Potable water systems can be financially sustainable in developing countries. We based our assessment of financial sustainability on a comparison of the willingness to pay for the improved water service with the cost to deliver this service to every household in the communities. The major conclusion is that potable water systems benefiting low-income populations are likely to be profitable and thus attractive for potential investors in El Salvador.
Degree
Ph.D.
Advisors
Lee, Purdue University.
Subject Area
Agricultural economics|Economics|Finance|Agriculture
Off-Campus Purdue Users:
To access this dissertation, please log in to our
proxy server.