Households’ Willingness To Pay For Improved Water Supply Services in Mekelle City, Northern Ethiopia

Good quality, reliable and affordable supply of drinking water is a basic need for human life. However, many people in LDCs are lacking this safe and quality water. Since Ethiopia is one of these LDCs its urban and rural area population does not have access to such attributes of water. Therefore, reliability and quality are crucial for household water supply. In this study the CVM was used to analyze the determinants of households’ WTP for improved water services by applying the single bounded dichotomous choice value elicitation format. The study used cross-sectional data collected from 215 randomly selected sampled households from Mekelle city. The CV survey responses were analyzed through descriptive and econometric analysis using Probit and Tobit as empirical models. The CV survey results revealed that 199 (98.51%) of the respondents were willing to pay a positive amount for improved water services. Thus if the proposed water improvement scheme is implemented, in addition to satisfying the water needs of the households, the city’s utility management can collect more revenue from the sale of improved water. The CV survey results also show that the mean WTP of households for the proposed improved water service is between 29.60 cents and 51.51 cents per jerry can depending on the method used. The results from the test statistics show that sex of the respondents, Education of the respondents, monthly income of the household, and satisfaction of the existing service significantly affects both the probability of households’ WTP for improved water services in the Probit model and the maximum amount they are willing to pay in the Tobit model. Therefore, policy makers need to take in to consideration these socio-economic and demographic factors and some other attributes of water in designing the improved water supply system of the city.