Abstract:
Access to and use of safe drinking water has a great contribution to health, productivity, and social
development. However, many people particularly in developing countries like Ethiopia lack access to
quality and adequate water services which affects their life in many different ways. The purpose of this
study is to assess determinants of households’ Willingness to Pay for Improved Water Supply Services in
Babicha Town, West Shoa zone, Oromia Regional state, Ethiopia. The study was manly relying on
primary data collected from 342 sample selected at random using household survey questionnaire.
Additional information was also obtained through key informant interview. The collected data were
analyzed by STATA version 14 statistical software programs. Data were analyzed using descriptive
statistics and econometric models. The survey results revealed that 244 (71.35%) of the respondents were
willing to pay a positive amount for improved water services. Probit and Tobit models were applied to
identify determinants of Households’ Willingness to Pay for Improved Water Supply Services. The first
model, the probit model was used to analyze the determinants of households’ WTP decision for improved
water supply services. The results of this study confirmed that age of the respondent, household family
size, quality of water being used, bid value were statistically significant variables that negatively
influenced the probability of households’ WTP for improved water supply services of household heads in
the study area. On the other hand, educational level of household head, household’s monthly income,
ownership of residential house were statistically significant variables that positively associated with the
probability of households’ WTP for improved water supply services of household heads in the study area.
The second model, Tobit model was used to identify the maximum amount of money that households are
willing to pay for the improved water services in the study area. The results of this model revealed that
age of the respondent, household family size and bid were statistically significant variables that
negatively influenced the probability of households’ maximum WTP for improved water supply services in
the study area. On the other hand, educational level of household heads and ownership of residential
house were statistically significant variables that positively influenced the probability of households’
maximum WTP for improved water supply services in the study area. The study concluded that if the
proposed water improvement scheme is implemented, the town utility management can collect more
revenue from the sale of improved water and satisfy the water needs of household. It is recommended that
awareness creation, boosting the level of household income, and implementing improved water scheme
helps to improve water supply services.
