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Domestic water pricing with household surveys : a study of acceptability and willingness to pay in Chongqing, China

Author:	Wang, Hua; Xie, Jian; Li, Honglin;	Collection Title:	Policy Research working paper ; no. WPS 4690
Country:	World; China;	Date Stored:	2008/08/13
Document Date:	2008/08/01	Document Type:	Policy Research Working Paper
Language:	English	Major Sector:	Public Administration, Law, and Justice; Health and other social services; Information and communications; Water, sanitation and flood protection
Rel. Proj ID:	1W-Understanding And Improving Environmental Governance In Develop -- -- P101452;	Region:	The World Region; East Asia and Pacific
Report Number:	WPS4690	Sub Sectors:	Health; Solid waste management; Media; Water supply; General public administration sector
SubTopics:	Environmental Economics & Policies; Town Water Supply and Sanitation; Water and Industry; Water Supply and Sanitation Governance and Institutions; Water Supply and Systems	Volume No:	1 of 1

Summary: In determining domestic water prices, policy makers often need to use information about the demand side rather than only relying on information about the supply side. Household surveys have frequently been employed to collect demand-side information. This paper presents a multiple bounded discrete choice household survey model. It discusses how the model can be utilized to collect and analyze information about the acceptability of different water prices by different types of households, as well as households' willingness to pay for water service improvement. The results obtained from these surveys can be directly utilized in the development of water pricing and subsidy policies. The paper also presents an empirical multiple bounded discrete choice study conducted in Chongqing, China. In this case, domestic water service quality was seriously inadequate, but financial resources were insufficient to improve service quality. With a survey of about 1,500 households in five suburban districts in Chongqing Municipality, this study shows that a significant increase in the water price is feasible as long as the poorest households can be properly subsidized and certain public awareness and accountability campaigns can be conducted to make the price increase more acceptable to the public. The analysis also indicates that the order in which hypothetical prices are presented to respondents systematically affects their answers, and should be taken into account when designing survey instruments.


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