Willingness to Pay for Improved Water Supply: A Policy Implications for Future Water Security

Abstract

Despite recent improvements in ensuring access to safe drinking water, a huge number of people still do not have access to that safe water. Bangladesh achieved laudable success in achieving Millennium Development Goals including extension of water supply and sanitation coverage. The country would face more challenges as the number of semi-urban and urban dwellers grows each day, and grows at a faster rate. It is always difficult for a country like Bangladesh to become proactive to any apprehending challenges due to her limited financial strength. However, cost recovery approaches (CRA) for water supply services could reduce the burden. A typical CRA intends to recover the cost of investment (often only operating cost) through charging additional bills for the utility usages. Applicability of CRA can be determined by estimating the consumer’s willingness to pay (WTP) for the intended intervension. WTP is a widely used economic tool to assess the economic value of of non-marketed commodities. This study investigated the consumers’ WTP for an improved water supply system in a semi-urban area of Bangladesh. The study adopted a Contingent Valuation Method to estimate consumer’s WTP for animproved water supply system as compared that of present condition. A total of 396 out of 11605 households were surveyed using a structured questionnaire. Presently, the residents (28% of the total) receive supply water twice a day and only 2 hours of running tap water with complains of high iron and arsenic content. A household consumes about 421 liters of water per day and pays only BDT 100 per month. About 65% of the surveyed households expressed their WTP for a safe and uninterrupted water supply. The average stated WTP is BDT 87.25 (± 91.92) per month in addition to the present water utility charges. The stated amount is only 0.49% of their monthly household income (BDT 18058) and less than 25% of the money (BDT 365.79/month) they currently spend for collection and purification of water for household consumption. Considering a present water coverage (28%) and revenue collection efficiency (80%), the stated extra money could earn about 150% of the present annual operation and maintenance cost.