Willingness to Pay for Improved Water Service: Evidence from Urban Peru

Francisco Galarza (), Max Carbajal and Julio Aguirre
Authors registered in the RePEc Author Service: Jorge M. Agüero

No 185, Working Papers from Peruvian Economic Association

Abstract: We study the willingness to pay (WTP) for a large set of improvements in water service related to water quality, continuity, and securing access for people with no house piped water during the COVID-19 pandemic. Using data from urban Peru, and the contingent valuation method, we estimate a mean WTP of around PEN 4.3 (USD 1.05), 3.7 and 1.8, respectively, for the aforementioned sets of improvements, with the combined WTP representing a 23% increase in the households’ water service monthly bill. We find that the WTP for all sets of improvements is influenced by the expenditure in bottled water (which acts as a substitute for tap water) and a proxy variable for household assets. The influence of the individual characteristics typically scrutinized by the literature (e.g. sex, age, and education) varies with the type of improvement examined. We find a significant heterogeneity in WTP across providers and calculate the users’ contribution to a water fund that could crowd-in the public investment in water infrastructure.

Keywords: Access to tap water; Contingent valuation method; Continuity; COVID-19; Households; Quality; Safe water; Willingness to pay (search for similar items in EconPapers)
Date: 2022-12
New Economics Papers: this item is included in nep-ban, nep-net and nep-pay
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Working Paper: Willingness to pay for improved water service: evidence from urban Peru (2022)
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