Preferences for Domestic Water Services in the Middle Olifants Sub-Basin of South Africa

ZEF - Discussion Paper No. 131

33 Pages Posted: 20 May 2009

See all articles by Julia Kloos

Julia Kloos

University of Bonn - Center for Development Research (ZEF)

Daniel W. Tsegai

University of Bonn - Department of Economic and Technological Change

Date Written: May 20, 2009

Abstract

Using household survey data, this study investigates preferences for domestic water services in the Middle Olifants sub-basin of South Africa. Water is a relatively scarce resource in South Africa that is distributed unevenly both geographically and seasonally as well as socio-politically. For a water management addressing the policy objectives of efficiency in use, equity in access and benefits and long-term sustainability, economic valuation of the different water uses is required. In order to detect households' preferences, a choice experiment of the various water services was conducted. Results suggested the presence of preference heterogeneity and therefore, a latent class model was applied, dividing households into homogeneous groups according to their preferences. Four distinct groups of households could be identified which differ significantly in terms of their socio-economic characteristics, their attitudes toward pricing of water and their satisfaction with current water service levels. Willingness to pay (WTP) estimates of different water service characteristics in all groups indicate that households are willing to pay higher prices for a better and more reliable water services provision. But the amount households are willing to pay differs among the groups. This information is helpful for policy-makers to enable the design of water services in the Middle Olifants according to preferences of local households. Besides, WTP estimation can provide a basis for setting water tariffs.

Suggested Citation

Kloos, Julia and Tsegai, Daniel W., Preferences for Domestic Water Services in the Middle Olifants Sub-Basin of South Africa (May 20, 2009). ZEF - Discussion Paper No. 131. Available at SSRN: https://ssrn.com/abstract=1407551 or http://dx.doi.org/10.2139/ssrn.1407551

Julia Kloos (Contact Author)

University of Bonn - Center for Development Research (ZEF) ( email )

Walter-Flex-Str. 3
Bonn, NRW 53113
Germany

Daniel W. Tsegai

University of Bonn - Department of Economic and Technological Change ( email )

Center for Development Research (ZEF)
Walter-Flex-Str. 3
Bonn, 53113
Germany

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