Households willingness to pay for improved urban water supply in Dire Dawa city administration: the role of socio-economic factors and water supply-related perceptions

Access to clean and safe water is one of the main challenges of Dire Dawa city administration, Eastern Ethiopia. Accordingly, this study aims to examine the households’ willingness to pay (WTP) for improved urban water supply and the associated determining factors in Dire Dawa City using a Contingent Valuation survey. Cross-sectional data were collected from 216 randomly selected households. The survey results indicate that 84% of the respondents were willing to participate in the improved water project, and the mean WTP appears to be 51 cents per 20 L of water. The mean WTP rises to 61 cents after excluding protest responses (zero bid values). The Binary Logistic model results (using closed-ended responses) reveal that the households’ decision on improved water supply is influenced by monthly income, family size, their perception on water availability and health problem. The results from the Tobit model, heteroscedastic linear model, and least-squares robust regression confirm that family size, income, and perceptions on water availability, water quality and water-borne health problem have significant effects on households’ Maximum WTP. The findings suggest the need to understand the demand-side situations and take socio-economic and water service-related perceptual factors into account when designing water improvement projects. The city administration should also pay close attention to the provision of safe and clean water.