Willingness-to-Pay for Water Resource Protection in El Salvador: Price Is Not the Only Factor
Keough, Adam Christopher
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AbstractFailing infrastructure and environmental degradation threaten access to water resources for millions around the world. Water resource management is particularly complex in developing countries because of limited financial, technical, and administrative capacities to effectively manage source watersheds. Few water users pay tariffs that adequately provide for infrastructure maintenance and source protection, leaving many systems highly subsidized by underfunded municipalities. Evidence indicates that investments in source watershed protection can result in improved quality and quantity for water service providers at a lower cost than traditional gray infrastructure. The purpose of this research is to better understand the value water users place on protecting source watersheds, as well as the major contributing factors influencing this value.
This research seeks to answer two primary questions: 1) Are water users in developing countries willing to contribute financial resources to source watershed conservation efforts? 2) Is the presence of good water governance a factor in the amount of money water users are willing to pay for source watershed protection? To answer these questions two hypotheses were evaluated: 1) Despite living in financially poor areas, individuals will be willing to pay for water resource protection in addition to their current water payments. 2) Communities that lack strong civic engagement and institutional capacities in terms of water resource management will demonstrate lower WTP for source watershed protection initiatives.
Using the Contingent Valuation (CV) methodology, this research elicited willingness-to-pay (WTP) values for protecting source watersheds in two municipalities in El Salvador, Tamanique and Comasagua. The CV survey contained a hypothetical referendum to create a water fund and multi-actor administrative board to carry out appropriate conservation interventions in source watersheds for each community. Logit models were estimated to determine the most relevant variables influencing WTP at the household level. Controlling for distribution frequency and family income, the variables that were statistically significant in predicting WTP were the proposed price increase of the referendum and participant level of education. Findings also indicate there is a significant gap between Tamanique and Comasagua in terms of local willingness to pay for watershed protection. This gap is believed to be influenced by differences in social and political variables contributing to local governances as determined by contextual evidence and third-party research.
Results of the WTP model indicate that the average household is willing to pay $3.03 more on their current water bill. This represents a 50% increase to the average monthly cost of $6 and would represent 5% of average monthly income of $200. These results can be used by policy makers in the study sites to adjust pricing structures, which could provide the needed financial means to ensure sustainable water resources in developing regions.
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