This study uses the double-bounded bid elicitation format to test whether the location of water source points significantly influences households? WTP for improved water supply reliability in Maseru City, Lesotho. Maseru was purposely selected on account of its documented water supply unreliability problems that cause suffering and welfare losses to households. WTP was thus elicited when location of the water source points was on-yard, and when it was communal. Purposive and random sampling methods were used to collect survey data from 104 households that access water from on-yard sources, and 107 households that access water from communal sources, making a total of 211 households.
The analysis shows that Maseru households have high levels of factual knowledge on challenges associated with unreliable water supply, and display attitudes and perceptions that are receptive to a policy designed to redress the status quo. The mean WTP was 1M1.49 per 20 litre jerrycan (LB M1.38 and UB M1.59) when location of water source points was on-yard, and M1.39 per 20 litre jerrycan (LB M1.30 and UB M1.47) when location of water source points was communal. The null hypothesis of equality of the two mean WTP values could only be rejected at the 10 % level of significance (t = 1.44, p = 0.076), suggesting that location of water source point might not be a powerful determinant of household WTP. This could possibly be attributed to the fact that the welfare losses associated with unreliable water supply might not powerfully discriminate between households based on the location of water source points.
The study further established that mean WTP for water supply reliability was higher than what households currently pay for water. For example, households currently pay M0.10 per 20 litre jerrycan to the Water and Sewerage Authority (WASA) of Lesotho when they access water on-yard or from communal sources. In addition, households pay a minimum of M1.00 per 20 litre jerrycan when obliged to buy water from vendors when water is not available from regular sources. Given that the analysis shows that households are WTP up to M1.49 per 20 litre jerrycan for improved water supply reliability, it appears that a policy that improves water supply reliability at a fee would result in a Pareto improvement.
Double-bounded models, differentiated by location of water source points, were used to determine factors that influence households? WTP. Results show that WTP is positively related to the following variables: age and educational level of household head, monthly income, average duration of water supply interruption, time spent making a round trip to alternative sources of water during supply interruptions, households? level of awareness regarding past unsuccessful attempts made by WASA to improve water supply reliability, and household perceptions regarding enactment and passing of a parliamentary bill that improves water supply reliability. WTP was negatively related to period household has lived in the current house and gender (males had a less WTP than females).
It can thus be concluded that households have a positive WTP for improved water supply reliability, and that their mean WTP for the same is higher than what they currently pay for water. In addition, location of water source points is not a strong determinant of WTP. Following from the above, the study recommends that WASA should consider investing in projects that improve water supply reliability, and in particular ensure that whenever supply is interrupted, the interruption does not last for more than one day per month. To fund such a scheme, the analysis suggests that WASA could consider levying a fee that ranges between M1.00 and M1.60 for each 20L jerrycan. The actual value of the fee should, however, be determined through a stakeholder engagement process. Finally, additional studies would be required to determine important factors that influence households? WTP for improved water supply reliability.
Dissertation (MSc Agric)--University of Pretoria, 2016.