Willingness to Pay to Avoid the Cost of Intermittent Water Supply

Abstract

This study summarizes the results of a contingent valuation survey of 200 households in Bandung, Indonesia for 24-hour water supply. The existing piped water supply in the city is intermittent and unreliable giving rise to additional cost to piped water users as well as inducing excessive use of ground water leading to the depletion of water table and land subsidence. The empirical data indicates that the project would generate social benefits. The mean willingness to pay to obtain a continuous service is Rp 22,156,- per month or equal to 29.7% surcharge over the water charge. The statistical analysis confirms that, family size, children and education determine how much households will be willing to pay; whereas only education accounts for the decision to pay or not to pay anything. By employing two treatment groups, the paper shows that the sample households opt that uninterrupted service is provided by the government rather than by a private operator.