Determinants Of Households’ Willingness To Pay For Improved Water Supply Services:The Case Of Babicha Town, Liban Jawi District, West Shoa Zone, Oromia Regional State, Ethiopia

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.