Willingness to pay to improve urban water supply: the case of Sucre, Bolivia

Abstract

In this study the contingent valuation method is applied in order to estimate the willingness to pay (WTP) of the inhabitants of Sucre (Bolivia) for an improvement in the urban water supply system. The study finds that about 55 per cent of households would be willing to pay an increase in their water bill for an improvement in the service. In order to deal with the problem of protest responses and the possible presence of a sample selection bias, a Heckman two-step model was estimated. More specifically, the econometric analysis undertaken reveals that there is no evidence of sample selection bias and that WTP positively relates to the respondents' household income, their level of education, the continuity of the water supply service, and the fact of being forced to carry water to cover their basic needs of drinking, cooking and hygiene.