The Use of Willingness to Pay Experiments : Estimating Demand for Piped Water Connections in Sri Lanka

The authors show how willingness to pay surveys can be used to gauge household demand for improved network water and sanitation services. They do this by presenting a case-study from Sri Lanka, where they surveyed approximately 1,800 households in 2003. Using multivariate regression, they show that a complex combination of factors drives demand for service improvements. While poverty and costs are found to be key determinants of demand, the authors also find that location, self-provision, and perceptions matter as well, and that subsets of these factors matter differently for subsamples of the population. To evaluate the policy implications of the demand analysis, they use the model to estimate uptake rates of improved service under various scenarios-demand in subgroups, the institutional decision to rely on private sector provision, and various financial incentives targeted to the poor. The simulations show that in this particular environment in Sri Lanka, demand for piped water services is low, and that it is unlikely that under the present circumstances the goal of nearly universal piped water coverage is going to be achieved. Policy instruments, such as subsidization of connection fees, could be used to increase demand for piped water, but it is unclear whether the benefits of the use of such policies would outweigh the costs.

Bibliographic Details

Main Authors:	Pattanayak, Subhrendu K., van den Berg, Caroline, Yang, Jui-Chen, Van Houtven, George
Language:	English
Published:	World Bank, Washington, DC 2006-01
Subjects:	ALTERNATIVE WATER, ALTERNATIVE WATER SUPPLY, BILLING, CAPITA CONSUMPTION, CASE STUDY, CONNECTED HOUSEHOLDS, CONNECTION, CONNECTION CHARGE, CONNECTION COST, CONNECTION COSTS, CONNECTION FEES, CONNECTIONS, CONSUMER SURPLUS, CONSUMERS, CONSUMPTION CHARGE, CONTINGENT VALUATION, CUBIC METER, CUBIC METERS, DECISION MAKING, DEGREES OF FREEDOM, DEMAND FOR WATER, DEVELOPMENT ECONOMICS, DICHOTOMOUS CHOICE, DISTURBANCE TERM, DRAINAGE, ECONOMIC DEVELOPMENT, ECONOMIC FACTORS, ECONOMIC VALUE, ECONOMICS, EMPIRICAL EVIDENCE, ENVIRONMENTAL, ENVIRONMENTAL ECONOMICS, ENVIRONMENTAL PROBLEM, ENVIRONMENTAL QUALITY, FINANCIAL INCENTIVES, FINANCIAL RESOURCES, FINANCIAL VIABILITY, GOOD QUALITY WATER, GOVERNMENT POLICIES, HEALTH CONSEQUENCES, HOUSEHOLD DEMAND, HOUSEHOLDS, INCOME, LITERS OF WATER, MONTHLY BILL, MONTHLY BILLS, MONTHLY CHARGE, NATIONAL WATER, NATIONAL WATER SUPPLY, NATURAL RESOURCE ECONOMICS, POLICY INSTRUMENTS, POOR HOUSEHOLDS, POVERTY MEASURE, POVERTY STATUS, PRIVATE OPERATOR, PRIVATE OPERATORS, PRIVATE SECTOR OPERATORS, PRIVATE WELLS, PROVISION OF WATER, PROVISION OF WATER SUPPLY, PROVISION OF WATER SUPPLY SERVICES, QUALITY WATER, SAFE WATER, SANITATION, SANITATION SERVICES, SERVICE DELIVERY, SERVICE IMPROVEMENT, SERVICE IMPROVEMENTS, SERVICE PROVIDER, SERVICE PROVIDERS, SERVICE PROVISION, SERVICE QUALITY, SEWERAGE, SEWERAGE SERVICES, SIMULATIONS, STATISTICAL SIGNIFICANCE, TARIFF STRUCTURE, TOWN, TOWNS, USER CHARGES, WATER CONNECTION, WATER COVERAGE, WATER DEPARTMENT, WATER POLLUTION, WATER QUALITY, WATER SECTOR, WATER SECTOR REFORM, WATER SERVICE, WATER SERVICES, WATER SOURCE, WATER SOURCES, WATER SUPPLY, WATER SUPPLY SERVICE, WATER USE, WATER UTILITIES, WELLS, WILLINGNESS TO PAY, WTP,
Online Access:	http://documents.worldbank.org/curated/en/2006/01/6530300/use-willingness-pay-experiments-estimating-demand-piped-water-connections-sri-lanka https://hdl.handle.net/10986/8798
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