Abstract. Improving existing drinking water supply services in developing countries depends crucially on available financial resources. Cost recovery rates of these services are typically low, while demand for more reliable services is high and rapidly growing. Most stated preference based demand studies in the developing world apply the contingent valuation method and focus on rural areas. This study examines the willingness of households to pay for improved water supply services employing a choice model (CM) in an urban area in Ethiopia, a country with the lowest water supply coverage in Sub-Saharan Africa. The design of the choice model allows the estimation of the values of both drinking water reliability and safety. The estimated economic values can be used in policy appraisals of investment decisions. Despite significant income constraints, households are willing to pay up to 60% extra for improved levels of water supply over and above their current water bill, especially households living in the poorest part of the city with the lowest service levels. Women value the improvement of water quality most, while a significant effect is found for averting behavior and expenditures.
How much are households willing to contribute to the cost recovery of drinking water supply? Results from a household survey
