RURAL HOUSEHOLDS’ WILLINGNESS TO PAY FOR IMPROVED POTABLE WATER SUPPLY IN DUGDA DISTRICT, OROMIA NATIONAL REGIONAL STATE, ETHIOPIA

Abstract

Access to improved water is one of the most essential factors for enabling sustainable economic development. However, access to improved drinking water remains to be the problem faced by most of the rural communities of Ethiopia. To improve this situation the extent to which the community participates in the form of WTP for the proposed improvement in the water supply problems is very crucial for the realization of the improvements. Hence, this study examines the rural households’ WTP for improved potable water supply using the application of the contingent valuation method. The double bounded dichotomous choice followed by an open-ended question was used to elicit households’ WTP. A cross-sectional data collected from a randomly selected 272 sample households were analyzed using descriptive statistics and an econometric model. The SUBP econometric model was employed to identify factors affecting household WTP and to estimate the mean WTP. The result of the SUBP model indicated that sex of the respondent, annual farm income, off-farm income, the average time taken to fetch water, use of water treatment techniques and monthly water expenditure have a positive and significant effect on households’ WTP for improved water supply. However, the variables of household size, perception of the quality of the existing water, reliability of the existing water supply and bid values have a negative and significant effect on households’ WTP for improved water supply. The mean WTP for improved potable water supply obtained from the double-bound dichotomous choice and open-ended questions were 1.80 ETB and 1.37 ETB per 20liter of Jerrican, respectively. The result indicates that rural households are willing to pay from 5.6% to 7.4% of their average income. The aggregate values from the improved water supply were 98118.62 ETB and 74679.17 ETB calculated from double bounded dichotomous choice and open-ended questions, respectively. Hence, there is a greater potential to secure financial sustainability and cost recovery of rural water supplies by introducing a new water tariff structure and due consideration given to household’s characteristics in the level of rural water supply improvements.