Willingness to Pay for Improved Rural Water Supply in Goro-Gutu District of Eastern Ethiopia: An Application of Contingent Valuation

Abstract

This study employs a contingent valuation method to estimate willingness to pay for improved rural water supply.It provides information on the demand for improved services and the potential for them to be sustainable. Theanalysis was based on data collected from 132 households using rural water utilities for at least three years. Bothbinary and ordered probit models were used to examine the determinants of willingness to pay. The estimatedmean and median willingness to pay was found to be Birr 6.83 and 5.87 per household per month. Resultsindicate that households using water purification methods earn better annual income, participated during theearly phase of project implementation and are spending more time in collecting water and hence are more likelyto pay. Whereas those households with large family members, which use reliable water sources from convenientwater points and got higher starting bid values are less likely to pay. This implies the need to take the specificcharacteristics of rural households and their service level demand into account in planning rural water supplyprojects, which may contribute to set sound cost recovery system that can sustain the service delivery.

Key Words: Cost-recovery; Valuation; Water supply; Willingness to pay