How much are households willing to contribute to the cost recovery of drinking water supply? Results from a household survey

Abstract. Financial resources are crucial to improve existing urban drinking water supply in developing countries typically characterized by low cost recovery rates and high and rapidly growing demand for more reliable services. This study examines the willingness to pay for improved urban drinking water supply employing a choice model (CM) in an urban context in Ethiopia, Hawassa, with a household survey of 170 respondents. The design of the choice model allows the estimation of the values of two attributes of urban drinking water service (extra day water delivery per week and safer water). The findings indicate that households are willing to pay up to 60% extra for improved levels of water supply over and above their current water bill. Especially those households living in the poorest part of the city with the lowest service levels demonstrate that they are willing to pay more despite significant income constraints they are facing. Women value the improvement of water quality most, while a significant effect is found for averting behavior and expenditures. The estimated economic values can be used in policy appraisals of investment decisions.