Akhtar 2018

Chinese Journal of Urban and Environmental Studies
Vol. 6, No. 2 (2018) 1850013 (12 pages)

© World Scientific Publishing Company and
Social Sciences Academic Press (China)
DOI: 10.1142/S2345748118500136
Determination of Willingness to Pay for Improved Water

by UNIVERSITY OF NEW ENGLAND on 02/09/20. Re-use and distribution is strictly not permitted, except for Open Access articles.
Supply in Selected Areas of Lahore
† ‡
Sana AKHTAR*, Sarah DEAN , Faiza ANJUM and Maryam JAVED§
Department of Environmental Sciences
Kinnaird College for Women, 93 Jail Road
Lahore 54000, Pakistan
Chn. J. Urb. Environ.Stud 2018.06. Downloaded from www.worldscientific.com
*sanakhtar23@gmail.com
†
srdsarahdean1884@gmail.com
‡
faizaanjum15@yahoo.com
§
malikmaryam14@gmail.com
Water scarcity is an alarming issue in the developing world. Due to population explosion,
the supply of water to households is becoming difficult. And as the quality of water supply
infrastructure is deteriorating, clean water is getting mixed with sewage and becoming a cause of
waterborne diseases. This study was carried out in the city of Lahore, Pakistan, to find out the
willingness to pay (WTP) for improved water supply by using Contingent Valuation Method
(CVM). This study explores the relationship of WTP with socio-economic factors, i.e. income,
accommodation and employment. Moreover, questionnaires were administered to randomly
selected 200 respondents. For statistical analysis stepwise linear regression, Pearson correlation
and chi square were employed to find out the variables that determine WTP for improved water
supply quality. Results showed that income was the variable that most significantly impacted the
WTP for improved water supply. The WTP amount was found to be 0.70 USD. People were not
generally satisfied with the water supply quality. Unavailability of water for 1–2 h per day was
commonly reported by the respondents. However, more studies should be conducted with a larger
sample size to enhance our knowledge about water supply situation in Lahore.
Keywords: Contingent Valuation Method (CVM); willingness to pay (WTP); regression model;
improved water quality.
1. Introduction
Clean drinking water is the fundamental requirement for human health and survival.
In every household, water is used for varied purposes like: drinking, cooking, cleaning,
gardening, laundry, etc. Any irregularity in availability of water causes direct effect on
human health and ability to carry out daily life activities. Hence, water quality should be
safe and its availability should be regular for households. Nowadays, most of the world is
facing the issue of overpopulation which has caused significant effect on water quality and
its safe access (Asim et al., 2015). It has been estimated from various studies that almost
700 million people have no access to safe water supply system and 2.5 billion people have
to deal with poor sanitation system. Most of the waterborne diseases in developing
* Corresponding author.
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Sana AKHTAR et al.
countries of Asia, South Africa and central world are caused by poor sanitation system and
inadequate water supplies (Van Houtven et al., 2017). Some 3 in 10 people worldwide,
or 2.1 billion, lack access to safe, readily available water at home, and 6 in 10, or 4.5
billion, lack safely managed sanitation, according to a new report by WHO and UNICEF
(WHO, 2017). Water requirements of most households are met by public wells, purchase
of bottled water, private wells and purchase from vendors. These sources not only waste
resources and time, but also cause waterborne diseases. It is a real challenge for authorities
to meet the demand of present population and augment the supply for future demand
(Dauda et al., 2015; Jin et al., 2106).
People demand a clean and uninterrupted supply of water to satisfy their needs.
However, it is observed in many studies, particularly in developing countries, that there is
a gap between the willingness to pay (WTP) and the service provided in return. A study
was performed in Bangladesh, where people were drinking arsenic contaminated water
and wanted better water quality for themselves and their children (Dey et al., 2018).
Similarly, in a study performed in Neblet Town, Ethiopia, people were not satisfied with
the supply of water and per unit charge for the supply of water. Hence the WTP of the
people was evaluated using Contingent Valuation Method (CVM) which showed that
96% of people are willing to pay for better services (Mezgebo and Ewnetu, 2015). In a
study performed in the South Coast region of Bangladesh, the WTP of the citizen was
also evaluated by the CVM. The WTP there was found to be 0.47 USD (3% of the
monthly salary of the people). It was observed that most of the income was used to buy
medicines for waterborne diseases, which significantly impacted their WTP (Islam
et al., 2018). A striking difference was observed among Chinese urban residents’ WTP
for improved water supply services, ranging from 0.03 USD to 0.35 USD, in a survey
performed in urban China (Wang et al., 2018). A show of low confidence on the existing
water supply services was observed in a study performed in upper Jordan region, when
the quality of water supplied by utility network was safe for drinking, yet people were
buying water from external sources (Orgill-Meyer et al., 2018). In the mining region of
Thar Desert, Pakistan, a study on the WTP of people was conducted with a sample of 268
households. That area specifically suffers from water scarcity due to extensive mining
and changing climate. By using the CVM, it was observed that people were willing to
pay 38–48 USD for better and risk-free water supply system. It was observed that
this was almost 11–16% more than the existing water expenditure of the households
(Aslam et al., 2018).
Lahore is one of the several poorly governed cities of the developing world. In
this city, water is mostly supplied via pipes and wells, however, still several improvements
are required in the supply of water. In a study performed on the consumers of water
utilities in 50 Asian cities which include Lahore, two of the most frequent consumer
complaints were poor water quality and frequent interruptions in supply (Akram and
Olmstead, 2011).
This study was done randomly in Lahore City (Fig. 1). The main objective was to
estimate the amount that people are willing to pay for improved water supply system and
identify various water problems.
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Determination of WTP for Improved Water Supply in Selected Areas of Lahore
Source: City District Government Lahore Map (https://i0.wp.com/eproperty.pk/wp-content/uploads/2011/09/

Lahore-City-District-Map.gif?ssl=1).
Fig. 1. Map of the study area.
2. Methodology
2.1. Data collection
The primary data was collected by administering a questionnaire survey related to
demographic information and the attitudes and interests of people toward the improved
water supply in Lahore. A survey on 200 households (randomly selected) in Lahore City
was conducted with semi-structured questionnaires.
The questionnaire is divided into three sections. Section 1 is a demographic survey that
includes information of age, income, relationship status, gender, family size, education and
occupation. Questions in Sec. 2 are related to the problems that people face for the access
to water. Section 3 contains the questions related to the satisfaction degree of people with
water supply and their WTP for water supply improvement.
The main question determining the WTP of the respondents is: “Are you willing
to pay for improved water supply?” If the respondents answered “yes”, then they
were asked how much they were willing to pay for improved water supply; if the
respondents answered “no”, they were asked why they were not willing to pay for im-
proved water supply. The respondents were under no pressure while responding to the
questionnaire survey.
Besides, the secondary data was collected by consulting the literature of published
articles, books and other digital and print media sources.
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Sana AKHTAR et al.
2.2. Research method

The CVM is used to find out the WTP of people in Lahore. In this study, face to face
interview was done and direct questions were asked. An imaginary scenario was created
regarding improvement or deterioration of existing water supply sources (Jabeen
et al., 2015). It is an evaluation method used to find out the maximum amount that
someone is willing to pay for the benefit of environment. According to the hypothetical
scenario of water supply systems created in the questionnaire, people’s WTP for the better
environmental conditions is calculated (Diamond and Hausman, 1994).
According to Akhtar et al. (2016) and Kong et al. (2014), the following equation is
used to find out the WTP:
Y ¼ 0 þ n Xn : ð2:1Þ
In Eq. (2.1), Y is a dependent variable, 0 is a constant, n are the estimated linear

regression coefficients and Xn denote the explanatory variables.
Related statistical analysis is done by the SPSS version 25.0, including descriptive
statistics, stepwise regression, chi-square and CVM.
3. Results and Discussion

The results of the demographic survey revealed that approximately 38% were males and
62% were females. Regarding the educational status of the respondents, 23.5% received
education up till intermediate, 8.5% till secondary, 44.0% up to graduate level and 13.5%
till post-graduate level. The mean schooling year was found to be 14 years. About 52.5%
of people were married and 47.5% were single. Also, about 25% of the respondents were
unemployed and 75% were employed (see Table 1).
On the second part of the survey, of the 200 respondents, it was observed that the main
source of water supply for 89.5% (179) of the respondents is municipal pipelines, and that
for 10% (20) is borewells, because of irregular water supply, bad taste, smell and ap-
pearance of water from municipal pipelines. About 91% (182) of people purchase water for
drinking and 9% (18) do not buy water, and 9% (18) face water shortage. If the informal
markets are monitored or regulated, they will serve citizens in a healthier way, as indicated
in a study conducted in Chennai, India, where citizens believed that improvement in the
water bill increases the welfare of the poor (Venkatachalam, 2015). About 22% of the
respondents pay water bill in the range of 1–2 USD, 18% pay 2.5–5 USD, 35.5% pay in the
range of 5–8 USD, and 23.5% pay above 8 USD. Only 4.5% (9) of the respondents were
concerned about or have encountered waterborne diseases (Table 2). In a similar study
conducted in Bangladesh, it was found out that locals were receiving high levels of arsenic
(Ar) and iron (Fe) in their municipal water system. That steered to be the determining
factor of WTP of the people (Ahmad et al., 2005).
In addition, out of the 200 respondents, 185 respondents are willing to pay for improved
water quality in their residential areas and responded positively (WTP > 0). Hence, the
positive response rate is 92.5% (Table 3). The major justifications behind majority of true
zeroes can be the intermittent water shortage from time to time, purchasing of water for
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Table 1. Demographic characteristics of selected respondents.
Variable Options Frequency Percentage
Gender Male 76 38.0

Female 124 62.0
Education Post-graduate 27 13.5

Graduate 88 44.0
Intermediate 27 23.5
Matriculation 8 4.0
Secondary/Middle 18 8.6
Primary 4 2.0
Uneducated 8 4.0
Age (years) 15–20 15 7.5

20–25 39 19.5
25–30 45 22.5
30–35 27 13.5
35–40 41 20.5
40–45 27 13.5
45–50 3 1.5
Above 50 3 1.5
Accommodation Owned 122 61.0
Rented 78 39.0
Family size <3 29 14.5
4 47 23.5
5 13 6.5
>6 111 55.5
Employment Employed 150 75.0
Unemployed 50 25.0
Relationship status Single 105 52.5
Married 95 47.5
Monthly income of a family <200 USD 50 25.0
<200–400 USD 84 42.0
400–600 USD 23 11.5
600–800 USD 5 2.5
800–1,000 USD 30 15.0
>1,000 USD 8 4.0
Source: Made by the authors with the SPSS version 25.0.
drinking and high water bill (Table 2). The negative WTP share of the true zeroes
(WTP ¼ 0) was 7.5%, because only 15 responded negatively. The reason behind the
negative response can be some of the financial issues. Many people believe that it is
government’s responsibility to improve water quality and some were satisfied with
their existing water supply. The WTP was found to be 0.70 USD. A similar research
was conducted in India to assess the WTP for improved water quality of River Pavana.
The CVM was used to assess the WTP of the lower-class people. The results showed
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Sana AKHTAR et al.
Table 2. Factors related to getting access to water.
Variable Options Frequency Percentage
Main source of water Pipeline 179 89.5

Borewells 20 10.0
Spring 1 0.5
Trip to water source <200 m 196 98.0
>200 m 4 2.0
Location of water source Inside yard 197 98.5
Outside yard 3 1.5
Borewell installed Yes 75 37.5
No 125 62.5
Pay for water services Yes 182 91.0

No 18 9.0
Water usage 10 L 4 2.0
20 L 189 94.5
50 L 7 3.5
Water bill 0.00* 2 1.0
1–2 USD 44 22.0
2.5–5 USD 36 18.0
5–8 USD 71 35.5
above 8 USD 47 23.5
Water shortage 0.00 2 1.0
Yes 18 9.0
No 179 89.5
3.00** 1 0.5
Shortage duration 0.00 2 1.0
<3 h 181 90.5
<3 h 7 3.5
<24 h 10 5.0
Access to water Easy 187 93.5
Moderately difficult 7 3.5
Difficult 1 0.5
Total 195 97.5
4.00*** 5 2.5
Purchasing water Yes 182 91.0
No 18 9.0
Waterborne diseases Yes 9 4.5
No 191 95.5
*No existence of such conditions; 0.00 or 0.00* means no existence of such

conditions. For example, people who have boring pumps in their homes don’t pay
water bills, so there is no existence of such a condition. 3.00** and 4.00*** both
represent missing values. As some respondents didn't provide answers for some
questions, so the authors assigned some random numbers (3.00 or 4.00) to them.
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Table 3. WTP and WTP amounts for improved water quality in selected areas of Lahore.
WTP
Frequency Percent Valid percent Cumulative percent

Valid Yes 185 92.5 92.5 92.5

No 15 7.5 7.5 100.0
Total 200 100.0 100.0
WTP amount
USD Frequency Percent Valid percent Cumulative percent
Valid 0.00 5 2.5 2.5 2.5

1–2 148 74.0 74.0 76.5

2.5–5 25 12.5 12.5 89.0
5–8 20 10.0 10.0 99.0
Above 8 2 1.0 1.0 100.0
Total 200 100.0 100.0
that locals were ready to pay 17.6 INR for better water quality (Imandoust and
Gadam, 2007). And in a study conducted in Bangladesh, the WTP of people was
0.25 USD per week, with the income level being the detrimental factor (Dey et al., 2018),
same as observed in this study.
To evaluate the WTP of Lahore City, the authors employed the stepwise linear re-
gression model Y ¼ 0 þ n Xn , in which Y is a dependent variable (i.e. WTP), 0 is a
constant, n are the estimated linear regression coefficients and Xn denote the explanatory
variables (Akhtar et al., 2016; Kong et al., 2014). The results are shown in Table 4. 0 was
found to be 0.702, n were identified as follows: 1 ¼ income (0.249), 2 ¼ education
Table 4. Results of the stepwise linear regression model.
Unstandardized coefficients Standardized coefficients
Model Std. error t Sig.
(Constant) 0.702 0.089 7.922 0.000

1 Monthly family income 0.249 0.030 0.504 8.201 0.000
(Constant) 1.089 0.183 5.964 0.000
Accommodation 0.232 0.096 0.155 2.415 0.017
(Constant) 1.464 0.241 6.065 0.000
Accommodation 0.269 0.096 0.180 2.793 0.006
Employment 0.240 0.103 0.143 2.339 0.020
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Table 5. Pearson correlation matrix.
Pearson correlations
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Sana AKHTAR et al.
1 Gender 1.0
2 Education 0.03 1.0
3 Age 0.02 0.34** 1.0
4 Family size 0.05 0.16* 0.15* 1.0
5 Relationship status 0.12 0.14 0.24** 0.14* 1.0
6 Employment 0.07 0.17* 0.27** 0.13 0.09 1.0
7 Accommodation 0.18* 0.25** 0.1 0.22** 0.04 0.13 1.0
8 Family income 0.13 0.05 0.26** 0.30** 0.04 0.07 0.33** 1.0
9 Getting water 0.02 0.16* 0.03 0.24** 0.11 0.02 0.08 0.09 1.0
10 Water needs 0.06 0.07 0.06 0.27** 0.18* 0.18* 0.09 0.11 0.47** 1.0
11 Borewell 0.03 0.004 0.02 0.25** 0.11 0.1 0.21** 0.13 0.12 0.08 1.0
12 Water usage 0.05 0.05 0.21** 0.02 0.12 0.02 0.03 0.06 0.19** 0.18* 0.13 1.0
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13 Purchase water 0.30** 0.07 0.17* 0.33** 0.09 0.15* 0.25** 0.48** 0.08 0.08 0.15* 0.01 1.0
14 Pay for water 0.11 0.04 0.02 0.04 0.05 0.18* 0.07 0.05 0.16* 0.25** 0.08 0.12 0.11 1.0
services
15 Water bill 0.18** 0.002 0.12 0.17* 0.05 0.07 0.29** 0.35** 0.21** 0.23** 0.53** 0.07 0.25** 0.18** 1.0
16 Water shortage 0.09 0.14 0.01 0.18* 0.14* 0.02 0.09 0.11 0.16* 0.05 0.004 0.06 0.06 0.09 0.07 1.0
17 Shortage duration 0.05 0.11 0.11 0.07 .003 0.09 0.08 0.01 0.1 0.21** 0.04 0.07 0.03 0.06 0.02 0.37** 1.0
18 Waterborne 0.13 0.14* 0.06 0.23** 0.11 0.04 0.03 0.14* 0.51** 0.62** 0.03 0.08 0.17* 0.18** 0.25** 0.35** 0.40** 1.0
diseases
19 Satisfied 0.02 0.05 0.09 0.08 0.06 0.000 0.01 0.03 0.07 0.04 0.11 0.01 0.05 0.11 0.04 0.08 0.27** 0.04 1.0
20 WTP 0.07 0.11 0.04 0.23** 0.09 0.08 0.11 0.05 0.22** 0.29** 0.04 0.01 0.04 0.34** 0.05 0.06 0.11 0.19** 0.03 1.0
21 WTP amount 0.03 0.03 0.20** 0.17* 0.08 0.15* 0.31** 0.50** 0.01 0.01 0.07 0.03 0.22** 0.02 0.18* 0.001 0.05 0.001 0.12 0.08 1.0
*Correlation is significant at the 0.05 level (two-tailed). **Correlation is significant at the 0.01 level (two-tailed).
Source: Made by the authors with SPSS version 25.0.
(0.232), 3 ¼ relationship status (0.240) and Xn are found to be as follows:

X1 ¼ 2:5250, X2 ¼ 1:3900, X3 ¼ 1:2500.
The variables of accommodation and employment have negative coefficients which
indicate that there is a weak correlation between the dependent and independent variables
and they are negatively correlated with other variables. Positive coefficients signify a strong
bond between the dependent and independent variables. If their values decrease, so do
other values. The income level of an individual greatly affects his/her WTP.
The bivariate Pearson correlation was also employed to find out the direct link between
two variables and it is represented by r. The results indicated positive significant rela-
tionship between the employment status and the WTP of the people (r ¼ 0:8, p > 0:05),
monthly family income level (r ¼ 0:5, p > 0:05) and accommodation (r ¼ 0:11,
p > 0:05) (Table 5).
Pearson’s chi-square test was also performed to find out the bivariate analysis between
independent and dependent variables. According to chi-square test, there is a strong re-
lationship between the household income level (X2 ¼ 101:072, df ¼ 4, p < 0:01) and
accommodation (X2 ¼ 21:567, df ¼ 4, p < 0:01) with the respondent’s WTP for the
improved water quality (Table 6).
In a similar study on WTP for improved air quality and solid waste management,
stepwise linear regression model, Pearson correlation and chi-square were used to deter-
mine the relationship between the independent and dependent variables (Akhtar
et al., 2016, 2017). Hence, from the test results it proved that the socio-economic deter-
minants have the strongest significance on WTP. Similar to our study, another study found
that the major determinants of WTP were the number of children, income, existing water
quality and environmental issues of the respondents (Brox et al., 2003). And the WTP
amount was found out to be 0.78 USD, which is very small. The reasons are as follows.
. It is believed that public is not responsible for the improved water quality but it is solely
the responsibility of the local administrative authorities or the government.
. Lack of awareness and less information are also contributing factors for the low WTP
amount.
. The existing water sources and the water bills can be influencing factors for low WTP
bid. Households with boreholes or borewells do not pay charges and perceive their water
to be of good quality. Thus, they were willing to pay less (Tussupova et al., 2015).
. The low income of the households might affect the WTP. A study by Rodríguez-Tapia
et al. (2017) in Mexico shows that the WTP is strongly influenced by income and high
cost of bottled water.
Table 6. Pearson’s chi-square test.
Variable Value Df Asymp. sig. (two-sided)
Income 101.072 4 0.000

Accommodation 21.567 4 0.000
Employment 6.491 4 0.165
Source: Made by the authors with SPSS version 25.0.
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Sana AKHTAR et al.
. There is a trust deficit between the government and the public. Even if any sum of
money given to the authorities is fruitful for safe drinking water, as observed in a study
performed in Jordan, where the water provided by the utility network was drinkable, the
citizens still purchase water from water shops or tankers (Orgill-Meyer et al., 2018).
4. Conclusions
This research was conducted to find out the problems related to water supply in various
areas of Lahore. It used open-ended questionnaires and the CVM to find out the WTP for
better water supply. Among 200 respondents, 92.5% of respondents showed positive
response and were in favor of the WTP for improved water quality. Only 7.5% of people
were not willing to pay, due to a lack of awareness, the trust deficit between government
and the public and existing water bills. They believed that improving the water supply
should be the duty of the government. Also, the people were unaware about the health
effects of the water provided in Lahore. Besides, many people faced water shortage at some
point. The public in Lahore were interested in improving water quality but not in paying for
it out of their pocket. The stepwise linear regression model showed the positive link
between WTP and the household’s monthly income (0.249) and negative link between
accommodation (0.232) and employment (0.240). The Pearson correlation indicated
positive significant relationship between the employment status and the WTP of the people
(r ¼ 0:8, p > 0:05), monthly family income level (r ¼ 0:5, p > 0:05) and accommodation
(r ¼ 0:11, p > 0:05). The chi-square test showed a strong relationship between the
household income level (X2 ¼ 101:072, df ¼ 4, p < 0:01) and accommodation
(X2 ¼ 21:567, df ¼ 4, p < 0:01) with the respondent’s WTP for improved water quality.
The important factors determining the WTP were the overall monthly income of the
respondent’s family, employment and accommodation, rather than the respondent’s gender,
age or family size. The study is beneficial since the results record the information about the
resident’s strengths, weaknesses and their priorities. Pakistan is among the lower and
middle income countries and has no rigid budget allocation. However, residents were still
willing to pay for improved water quality. The results were quite unexpected compared
with other developing countries where people were least bothered to pay due to improved
some socioeconomic conditions. The study result provides some essential implications for
policy makers and decision makers on improving the water quality in Pakistan.
Acknowledgments
The authors would like to acknowledge the Department of Environmental Sciences,
Kinnaird College for Women, Lahore, Pakistan.
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Chinese Journal of Urban and Environmental Studies

Vol. 6, No. 2 (2018) 1850013 (12 pages)

Determination of Willingness to Pay for Improved Water

Supply in Selected Areas of Lahore

Source: City District Government Lahore Map (https://i0.wp.com/eproperty.pk/wp-content/uploads/2011/09/

2.2. Research method

In Eq. (2.1), Y is a dependent variable, 0 is a constant, n are the estimated linear

3. Results and Discussion

Table 1. Demographic characteristics of selected respondents.

Variable Options Frequency Percentage

Gender Male 76 38.0

Education Post-graduate 27 13.5

Age (years) 15–20 15 7.5

Source: Made by the authors with the SPSS version 25.0.

Table 2. Factors related to getting access to water.

Variable Options Frequency Percentage

Main source of water Pipeline 179 89.5

Pay for water services Yes 182 91.0

*No existence of such conditions; 0.00 or 0.00* means no existence of such

Frequency Percent Valid percent Cumulative percent

Valid Yes 185 92.5 92.5 92.5

USD Frequency Percent Valid percent Cumulative percent

Valid 0.00 5 2.5 2.5 2.5

1–2 148 74.0 74.0 76.5

Source: Made by the authors with the SPSS version 25.0.

Table 4. Results of the stepwise linear regression model.

Unstandardized coefficients Standardized coefficients

Model Std. error t Sig.

(Constant) 0.702 0.089 7.922 0.000

Source: Made by the authors with the SPSS version 25.0.

Table 5. Pearson correlation matrix.

(0.232), 3 ¼ relationship status (0.240) and Xn are found to be as follows:

Table 6. Pearson’s chi-square test.

Variable Value Df Asymp. sig. (two-sided)

Income 101.072 4 0.000

Source: Made by the authors with SPSS version 25.0.

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No existence of such conditions; 0.00 or 0.00 means no existence of such