Willingness to Pay and Inclusive Tariff Designs for Improved Water Supply Services in Khulna, Bangladesh

Publication | January 2012
Willingness to Pay and Inclusive Tariff Designs for Improved Water Supply Services in Khulna, Bangladesh

The Khulna Water Supply Project aims at improving the access to safe water through the piped network in Khulna City, the third largest city in Bangladesh with a population of approximately 1 million.

The study investigates willingness to pay (WTP) for improved water supply services in Khulna, Bangladesh applying the contingent valuation method in a survey of 3,000 households. Mean WTP is large enough to justify the Khulna Water Supply Project. The median WTP is 3.6% of expenditure of the poorest households and connection charge is an important determinant of inclusiveness. Policy simulations show that poor households are less likely to be connected under a flat rate tariff, and that volumetric tariff is pro-poor. Installment payment of connection charges or inclusion of connection costs in capital investments will significantly improve the inclusiveness of the proposed project.

Contents 

  • Abstract
  • Introduction
  • Literature Review
  • Survey and Estimation Models
  • Estimation Results
  • Policy Simulations
  • Conclusion
  • References