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Assessing the Willingness-to-Pay for use of piped water service of households in Gia Lam District, Hanoi City, Vietnam
Thesis Abstract:
Currently, 13 out of the 22 communes of Gia Lam District, representing 71 percent of the district’s population, have no access to piped water services. This study analyzed the factors affecting households’ decision to connect to piped water and their level of willingness-to-pay (WTP) for such services. Two hundred household heads from Le Chi, Van Duc, and Trung Mau communes in the Gia Lam District of Hanoi City, Vietnam served as respondents in the survey conducted in 2014.
The study employed three methods of analysis. Descriptive statistics was used to describe factors related to respondents’ characteristics and water problem status in the study area. The Econometrics Method using Logit Model was employed to analyze factors affecting respondents’ decision to use piped water services. Meanwhile, the Contingent Valuation Method was used to estimate respondents’ WTP level, with a Linear Regression Model to identify factors that affect level of WTP.
The results showed that there were no existing piped water connections in the study sites. Main sources of water for drinking, cooking, and bathing were rainwater, bottled water, and well water, with the latter considered the most common source. However, out of the 200 households interviewed, 49 percent claimed scum and residues appear in well water. Moreover, thin layers of limestone were found in kettles used for boiling water. While the respondents generally regard bottled water as safe, however, its quality was still regarded unreliable because of its unclear sources.
Wastes from factories and industrial parks (37% of households claimed), residential waste (51.50% of households), and polluted river water (63% of households) were identified as causes of the low quality of well water. The two main alternatives used by the people to cope with this were the use of water-filtering machine with filter core (one-third of the households are using) and filter tank with sand and active coal (100% of households are applying). The former is more expensive, while the latter produces lower quality water.
Results of the study showed that 80 percent of households in the study sites were willing to shift to using piped water. Factors that influenced household’s decision to connect to piped water were determined using the Logit Regression Model. The household income, monthly water bill, level of education, number of children in the household, current quality of well water, and household’s use of bottled water were identified as factors that significantly affected respondents’ decision to connect to piped water services.
The results of the study also indicated that the level of WTP for piped water services now averages VND 4,314/m3 or VND 153.62 thousand per month. Households were willing to pay 2.56 percent of their monthly income to use piped water. This figure accounted for a small percentage of household income. Therefore, this suggests that these households are willing to apportion part of their income to pay for the piped water services. Based on results of the Linear Regression Model, the factors that significantly affected the level of WTP were education, household income, number of children in the household, well water quality, and the use of bottled water.
This study suggests that the water company can start with an initial price of VND 4,300/m3. In addition, water company can structure their water price schemes based on the level of household income or communes. Moreover, the orientation programs should also be organized to increase people’s understanding and appreciation of the importance and economical value of using piped water, and increase their level of WTP. This strategy can be carried out by the water company.