Willingness to Pay for Environmental Quality Improvement Programs and Its Determinants: Empirical Analysis in Western Nepal

Abstract

Environmental conditions in western Nepal are experiencing a possible threat to economic losses and sustainability, especially due to decreased productivity and increased health risks. This research investigates the maximum willingness to pay (WTP) of the local community for environmental quality improvement programs by using the contingent valuation technique. It also explores socio-economic and behavioral determinants that influence the maximum WTP for environmental quality improvement. A cross-sectional analytical design is employed using primary data obtained through in-depth face-to-face interviews with people in the community, interviews with key informants, focus group discussions and direct observations. Of the total of 420 households sampled, 72% were willing to pay for the environmental improvement program. The average WTP of households per annum for environmental protection at the community level is given as Nepalese rupees (NPR) 1909 (confidence interval—CI: 1796–2022). Environmental factors (prolonged drought, sporadic rains and drying sprout), socio-economic factors (family size, occupation, regular saving habits in microfinance, distance to the nearest health facility, health insurance enrollment, owning a home and owning arable land) and behavioral factors (cleanliness of the toilet) are the major factors influencing the household’s WTP decision. The findings of this study provide an important guideline and basis for the implementation of cost sharing in environmental quality improvement programs among the community, governments and other stakeholders in this sector.