Households willingness to pay for an improved water supply system: a case study of Pakistan

Pakistan has made significant progress in improving access to clean and safe drinking water. However, the task is far from complete, as nearly 64% of the population still lacks access to safe drinking water. In this situation, a well-organized and comprehensive plan to enhance the country’s water supply services is urgently needed. Accordingly, investigating the willingness to pay (WTP) for an Improved Water Supply System (IWSS) becomes essential. The main objective of this study is to analyze households’ WTP for IWSS, while the secondary objective is to identify the key determinants influencing this WTP. To achieve these objectives, a logit regression model was applied using data from 59,543 households drawn from the most recent Pakistan Social and Living Standards Measurement (PSLM) survey. The results indicate that, on average, households in Pakistan are willing to pay PKR 401 per month for IWSS. Rural households demonstrate a significantly higher average WTP (PKR 481/month) compared with urban households (PKR 149/month). Regionally, households in Baluchistan showed the highest WTP (PKR 694/month), followed by households in Sindh (PKR 461/month). Conversely, households in Punjab reported the lowest WTP (PKR 189/month), followed by households in Khyber Pakhtunkhwa, with only PKR 59/month. Findings from the logit regression analysis reveal that the high-income households are willing to pay more for IWSS than the low-income households. Households that rely on water sources such as piped water, wells, springs, ponds, rivers or canals, bottled water, tanker water, and filtration plants are more likely to be willing to pay for an improved water supply system. Similarly, households using government-installed water systems exhibit a higher WTP, whereas those with self-installed systems are less inclined to contribute. The likelihood of WTP increases when the nearest water source is located 0.5–1 km away but decreases when the distance extends to 1–2 km. Households that use water purification measures and those living in owner-occupied houses are also more willing to pay. Moreover, each additional room in a house is associated with a higher probability of WTP for IWSS. The findings of this research can be effectively utilized in cost-benefit analyses to evaluate the economic feasibility of investing in improved water supply systems across Pakistan.