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The use of willingness to pay experiments : estimating demand for piped water connections in Sri Lanka

Author

Listed:
  • Pattanayak, Subhrendu K.
  • van den Berg, Caroline
  • Yang, Jui-Chen
  • Van Houtven, George

Abstract

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.

Suggested Citation

  • Pattanayak, Subhrendu K. & van den Berg, Caroline & Yang, Jui-Chen & Van Houtven, George, 2006. "The use of willingness to pay experiments : estimating demand for piped water connections in Sri Lanka," Policy Research Working Paper Series 3818, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3818
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    References listed on IDEAS

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    5. John C. Whitehead & Subhrendu K. Pattanayak & George L. Van Houtven & Brett R. Gelso, 2008. "Combining Revealed And Stated Preference Data To Estimate The Nonmarket Value Of Ecological Services: An Assessment Of The State Of The Science," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 872-908, December.
    6. Cameron, Trudy Ann & James, Michelle D, 1987. "Efficient Estimation Methods for "Closed-ended' Contingent Valuation Surveys," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 269-276, May.
    7. W. Michael Hanemann, 1984. "Welfare Evaluations in Contingent Valuation Experiments with Discrete Responses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(3), pages 332-341.
    8. Ravallion, Martin & Wodon, Quentin, 1997. "Poor areas, or only poor people?," Policy Research Working Paper Series 1798, The World Bank.
    9. Antonio Estache & V. Foster & Q. Wodon, 2002. "Accounting for Poverty in Infrastructure Reform: Learning from Latin America's Experience," ULB Institutional Repository 2013/44108, ULB -- Universite Libre de Bruxelles.
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    Citations

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    Cited by:

    1. Noor, Junaid & Siddiqi, Wasif & Muhammad, Taj, 2010. "Estimation of Willingness to Pay for Improvements in Drinking Water Quality in Lahore: A Case Study of WASA, Lahore," MPRA Paper 53763, University Library of Munich, Germany.
    2. NAUGES Céline & VAN DEN BERG Caroline, 2006. "Water Markets, Demand and Cost Recovery for Piped Water Supply Services: Evidence from Southwest Sri Lanka," LERNA Working Papers 06.08.201, LERNA, University of Toulouse.
    3. Sheila M. Olmstead, 2010. "The Economics of Water Quality," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(1), pages 44-62, Winter.
    4. Céline Nauges & Caroline Berg, 2009. "Demand for Piped and Non-piped Water Supply Services: Evidence from Southwest Sri Lanka," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(4), pages 535-549, April.
    5. Anthony Amoah & Peter G. Moffatt, 2017. "Estimating demand for reliable piped-water services in urban Ghana: An application of competing valuation approaches," University of East Anglia School of Economics Working Paper Series 2017-01, School of Economics, University of East Anglia, Norwich, UK..
    6. Caroline Berg & Céline Nauges, 2012. "The willingness to pay for access to piped water: a hedonic analysis of house prices in Southwest Sri Lanka," Letters in Spatial and Resource Sciences, Springer, vol. 5(3), pages 151-166, October.
    7. Kertous, Mourad & Zerzour, Sahad, 2015. "To pay or not to pay? Water bill and delay in payment in Bejaia (Algeria): A duration analysis," MPRA Paper 67801, University Library of Munich, Germany.
    8. Wang, Hua & Xie, Jian & Li, Honglin, 2008. "Domestic water pricing with household surveys : a study of acceptability and willingness to pay in Chongqing, China," Policy Research Working Paper Series 4690, The World Bank.
    9. Francisco González Gómez & Jorge Guardiola & Edna Guidi Gutiérrez, 2012. "Willingness to pay more for water in a climate of confrontation: The case of Sucre, Bolivia," Working Papers. Serie EC 2012-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    10. Nababan, Tongam Sihol & Simanjuntak, Juara, 2008. "Aplikasi Willingness To Pay Sebagai Proksi Terhadap Variabel Harga: Suatu Model Empirik Dalam Estimasi Permintaan Energi Listrik Rumah Tangga
      [The Application of Willingness To Pay As A Proxy To Va
      ," MPRA Paper 49155, University Library of Munich, Germany.
    11. Wang, Hua & Xie, Jian & Li, Honglin, 2010. "Water pricing with household surveys: A study of acceptability and willingness to pay in Chongqing, China," China Economic Review, Elsevier, vol. 21(1), pages 136-149, March.

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    Keywords

    Town Water Supply and Sanitation; Environmental Economics&Policies; Water Use; Small Area Estimation Poverty Mapping; Urban Water Supply and Sanitation;

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