Determinants of rural households’ willingness to pay for improved potable water supply in Central Rift Valley Ethiopia: contingent valuation method approach

Abstract

Access to improved water is a global issue aligned with sustainable economic development. Ethiopia plans to enhance access to safe water through low-cost tech and community mobilization. However, finance is crucial for rural water construction and rehab, and the price mechanisms through users’ contributions can improve the cost recovery of rural water supply. Hence, the objective of this study is to investigate rural households’ willingness to pay (WTP) for improved potable water supply using the contingent valuation method (CVM). Data collected from a randomly selected 272 sample households were analyzed using descriptive and econometrics analysis. The seemingly unrelated bivariate probit (SUBP) econometric model was used to calculate the mean WTP and identify the determinant factors. The results show that 70.96% of the households were willing to pay the initial bid. The results show that sex, annual farm income, off-farm income, the average time it takes to fetch water, use of water treatment and monthly water expense have a positive and significant effect. Yet, household size, perceptions of the quality and reliability of the existing water supply, and bid values have a negative and significant effect. The mean value for improved potable water supply was 1.80 ETB per 20 liters of Jerrican1. Rural households in the study area are willing to contribute up to 7.4% of their annual income. To ensure the financial sustainability and cost recovery of rural water supply, it may therefore be possible to intervene and adopt a new water price system.

Keywords

• Contingent valuation
• Ethiopia
• seemingly unrelated bivariate probit
• water supply
• willingness to pay
• Agriculture & Environmental Sciences