Estimating rural households' willingness to pay for water supply improvements: a Benin case study using a semi-nonparametric bivariate probit approach

Abstract

This paper estimates households' willingness to pay (WTP) to improve rural water supply in Benin. Particular attention is given to the distribution of WTP, which is traditionally addressed using parametric assumptions. To avoid distributional assumptions, a semi-nonparametric bivariate probit approach is introduced. Results provide the first evidence that, in rural Benin, households wanting to improve water supply are willing to pay more than the current price. WTP for water supply is determined by wealth, education, and characteristics of existing and new water systems. Results indicate that a demand-driven management approach can contribute to water supply improvements and sustainability.

Keywords:

• Rural water supply
• sustainability
• willingness to pay
• semi-nonparametric bivariate probit
• Benin
• Sub-Saharan Africa

Acknowledgments

The authors would like to thank the German Academic Exchange Service (DAAD) and the Eiselen-Foundation Ulm for financial support. We also acknowledge the two anonymous reviewers for their useful and constructive comments.

Notes

1. Other words, such as “demand-driven”, are also used in the literature.

2. Direct payment means that households must financially contribute to water facilities' cost and pay for operation and management costs.

3. US$1 = CFA478.634 and €1 = CFA655.957 (in 2007).

4. Strategic and compliance biases arise from the fact that respondents might sometimes try not to reveal their true WTP.

5. In the option for water supply improvements, we also proposed improvements regarding water quality. However, both group discussion and household survey revealed that water quality from improved sources is perceived as safe in the study area. Accessibility to water in quantity is seen to be the major concern.