Awareness of coping costs and willingness to pay for urban drinking water service: Evidence from Lahore, Pakistan. (August 2021)

• Record Type: Journal Article
• Authors: Hasan, Syed M.; Akram, Agha Ali; Jeuland, Marc
• Is Part Of: Utilities policy. Volume 71(2021)
• Publication Date: 2021-08
• Subjects: Information treatment -- Contingent valuation -- Coping costs -- Water pricing -- Field experiment -- Piped water supply -- Pakistan; C93 -- Q25 -- Q56 -- L95; Public utilities -- United States -- Periodicals; Public utilities -- Government policy -- United States -- Periodicals; 363.6
• DOI: 10.1016/j.jup.2021.101246
• Languages: English
• ISSNs: 0957-1787

Abstract

Abstract: The global population is rapidly urbanizing, increasing pressure on scarce water resources. Lahore, Pakistan, is a case in point, with limited options for increasing water supply to meet booming demand. We ask whether households are willing to pay more cost-reflective tariffs following a simple, randomized information treatment involving calculation of the costs of coping with poor service quality. Treated households are 20 percentage points more likely to acquiesce to increased tariffs for improved service, and median monthly WTP increases 17–18%. A simple verbal procedure can increase acceptance of price increases, offering managers a valuable tool for water demand management. Highlights: We measure willingness to pay (WTP) for improved drinkability and reliability of water supply in Lahore. WTP is about $3.1 per month for improved service quality. A simple field calculation of household coping costs increases WTP by nearly 20%. WTP measured using the contingent valuation method is comparable to averting expenditure. Utilities could use information treatments that encourage such counting of costs to boost acceptability of tariff increases.