Contingent valuation of river pollution control and domestic water supply in Kenya

Abstract

The basic theme of this study is that determination of the economic value of water resources is a necessary condition for rational decision-making and management of these environmental assets, and their associated public goods, in developing countries. The research particularly evaluates the contingent valuation (CV) method as a technique for evaluating increments and decrements in environmental and natural resource service flows, and estimates households' evaluations for improvements in river water quality and connections to piped water supply for domestic uses. The study objectives were to (a) estimate the economic value of piped water supply and improved water quality in the Nzoia River Basin, Kenya, (b) evaluate the feasibility of using the CV technique to value an environmental amenity and its related quasi-public service in rural settings where respondents have limited education and monetary resources, (c) examine the role of temporal dimensions of bid payments (i e, frequency of payments) in contingent values for environmental commodities, (d) empirically investigate embedding effect bias in contingent valuation of improvements in river water quality improvement in a less developed economy, and (e) evaluate the role of water connection charges in households' willingness to hook onto piped water supply in Webuye Division, Kenya. Empirical analysis and estimates of the non-market value which local people assign to water quality in the Nzoia River and a private household water connection is based on a detailed survey of a representative sample of 311 households in Webuye Division of Bungoma District, Kenya. In an on-site survey carried out in May through September 1995, contingent markets were developed for the two goods, (1) improved river water quality, and, (2) provision of a private connection to water supply. The corresponding willingness to pay (WTP) values are explained using Ordinary Least Square regression models. Whatever the good, the WTP is seen to increase with income. However, the effects of other factors are more specific to the contingent good. In order of strength, the other determinants of WTP "quality" are sex, age, household ranking of status of domestic water source, distance from river to household residence, the other factors affecting WTP "connections" are existing source of water supply, household size, ranking of river water quality, and age of household head. On the whole, residents accepted the exercise of contingent valuation and were willing to pay important amounts (Ksh 459 and Ksh 386 on average per household per year, respectively, for goods 1 and 2). Discussion issues include policy significance of the resulting WTPs in terms of the demand for river pollution control and individual household water connections, the effect of the goods upon the CV evaluation process, the "Third World" impacts of frequency of payments in contingent valuation, including perceived-frequency and income-smoothing routes, the embedding effect in WTP values for water pollution abatement in the Nzoia River basin, the importance of pricing influences, specially payment profiles for initial connection charges, on household decisions to connect to piped water systems, and limitations of the study.