Estimating willingness to pay for improved water service in bonga town, southwest Ethiopia: a contingent valuation approach

Abstract

Improved water is multi-purpose inputs for sustaining life, and facilitating socio-economic growth. However, shortage of this service is the critical issues of the world. The problem is more direct in case of Ethiopia. Further, its value can’t be determined from market signal as it is non-market resource. However, for provision and effective management of the service, economic valuation becomes vital. This is therefore; this study designed to estimate willingness to pay for improved water service in Bonga town, southwest Ethiopia. The study used primary data obtained from a survey conducted on randomly selected 306 households in the month of February and March, 2020. The study used the CVM approach to estimate WTP using a DBDC elicitation format administered by in-person interview. The Logit model showed that; household with high income, whose marital status was widowed, employed, and stay a long year in the town, showed positive response. Whereas; respondent whose age is older, who attend primary and secondary school, who were using good substitute source, who were satisfied with current service and who was offered a higher initial bid showed negative response. Further, the result is valid and reliable as it is consistent with prior studies. Therefore, the result of the study from the Logit model suggest that; while setting domestic water tariffs and designing the service provision strategies, such significant factors ought to be considered according to their severity. Moreover, results from the descriptive statistics indicated that about 72.88% of households in the study area were willing to pay the random initial bid. But, generally, about 98.7% of the sampled households were willing to pay something for the improved water services. Accordingly, the estimated mean WTP for a 20 litre of water was found to be 0.65ETB from DBDC approach. This further shows households in the town were initiated to pay cost recovery tariff rate. Thus, the implementation of forthcoming project in the study area is recommended, as there is an opportunity to provide the improved service with a high potential of revenue generation.