Willingness to Pay for Drinking Water and Sanitation Availability in Indonesia

When sustainability of access and quality, is the primary concern, water and saniatioan should be considered as economic goods. Therefore, we need more accurate information on the amount of people’s willingness to pay. This study attemp to (i) identify the effects of drinking water supply and home sanitation on the rent price of a house, (ii) calculating the value of marginal implicit price (marginal willingness to pay) for drinking water and sanitation, and (iii) examine factors that affects the availability of drinking water supply and sanitation. Using the hedonic price model, we conclude that: (i) the availability of water piped facilities or pump water affect rent price of houses in urban areas, while the availability of toilet facilitated with septic tank influences rent price of houses both in urban and rural areas; (ii) garbage handlings through collection by authorized agency influences rent price of houses both in urban and rural areas, (iii) the WTP for piped facilities or pumped water in urban area is Rp. 6,850 per month, while the WTP for toilet facilitated with septic tank is Rp. 15,800, and the WTP for garbage collection is Rp. 11,950 per month. The logistic model approach revealed that households’ economic and social conditions such as age, number of family members, breadwinner’s education, and expenditure per capita influence the availability of drinking water facilities in the form of piped water or pumped water, sanitation facilities in the form of toilet with septic tank, and garbage handling facilities. Human capital or the level of education is very crucial in the possibilities of ownership of drinking water and sanitation facilities.