Investigating consumer willingness to pay for improvements in water service attributes in and around Vuwani Town, South Africa

Abstract

Water scarcity is a major problem in South Africa given the country’s classification as “water stressed” and the thirtieth driest country in the world. Moreover, and like many other developing countries, the country faces severe challenges with the reliability of water supplies. These challenges includes but are not limited to, the frequency of water supply, low water pressure and poor water quality among other challenges. Although these challenges impose difficulties in the country in general, they impose a severe burden in rural settings and outlying towns such as Vuwani town and the surrounding villages in Limpopo. To this end, this study investigates the willingness to pay (WTP) by households of the Vuwani town and surrounding villages in respect of potential improvements of attributes of a water service. The study also sought to uncover potential heterogeneity in the preferences for improvements of attributes of a water service. Using the Conditional and Mixed Logit models, and a sample of 230 households, the study’s findings indicated evidence of respondents expressing willingness to pay for improvements in the attributes of a water service in Vuwani. The results also demonstrated strong evidence of preference heterogeneity among the respondents as well. Since the findings of the study makes it possible to estimate the potential benefits of an improved water service in Vuwani, the results of the study should provide local policy makers with evidence based information of one component of a potential cost – benefit analysis study necessary to inform the potential level of investments required to improve water services in rural settings.