Valuation Study

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Value of Improved Water Quality

Attributes

Medium: Water

Country: Vietnam

Analytical Framework(s): Contingent Valuation

Unit(s): WTP

Study Date: 2003

Publication Date: 2005

Major Result(s)

Category Resource/Environmental Good VND
(2003)
VND
(2014)1
USD
(2014)2
Piped water households Mean WTP for improved water services (CV)3 108,000.00 218,900.88 10.25
Piped water households Median WTP for improved water services (CV) 148,000.00 299,975.28 14.04
Non-piped water households Mean WTP for for connection to and use of improved water services (CV) 94,000.00 190,524.84 8.92
Non-piped water households Median WTP for for connection to and use of improved water services (CV) 154,000.00 312,136.44 14.61
Non-piped water households Marginal WTP for excellent water quality (CM)4 94,000.00 190,524.84 8.92
Non-piped water households Marginal WTP for strong pressure (CM) 57,000.00 115,531.02 5.41

About the Inflation Adjustment: Prices in Vietnam (VND) changed by 102.69% from 2003 to 2014 (aggregated from annual CPI data), so the study values were multiplied by 2.03 to express them in 2014 prices. The study values could be expressed in any desired year (for example, to 2022) by following the same inflation calculation and being sensitive to directional (forward/backward) aggregations using your own CPI/inflation data.

Study Note: This report assesses the willingness of people in Ho Chi Minh City, Vietnam to pay for improvement in their water supply system. It also investigates what aspects of water supply, such as quality and water pressure, are most important. The study was carrie dout in response to the growing number of water supply problems in the city. It was also done to highlight the need for consumer demand to be given priority in water supply planning.

Study Details

Reference: Pham Khanh Nam and Tran Vo Hung Son. 2005. Household Demand For Improved Water Services in Ho Chi Minh City: A Comparison of Contingent Valuation and Choice Modeling Estimates. EEPSEA Research Report, No. 2005-RR3.

Summary: Urban water utility authorities in Ho Chi Minh City are facing difficulties in valuing the benefits of improved water service projects. This study used a contingentvaluation model and a choice model to estimate household preferences for water services. Single-bounded dichotomous choice questions were asked to derive households' willingness to pay for possible improvements in water services; the choices included higher water quality and reliable water pressure. In the choice modeling survey, nonpiped households (i.e. those not connected to central water supplies) were presented with a series of choice sets, each containing one water project option, defined by waterquality levels and water pressure levels. The results showed that the amount that households were willing to pay for improved water services was higher than the sum of their existing water bills plus coping costs (incurred by coping behaviors like collecting, pumping, treating, storing or purchasing water). The marginal values for the water quality attribute were much higher than for the water pressure attribute. The welfare estimates obtained from contingent valuation and choice modeling were fairly similar. Without knowing the costs of providing various service improvements, we cannot recommend specific improvements. However, we have established that (survey) households in HCMC have a clear preference for improvements in water quality overwater pressure and a substantial willingness to pay for it and this is important information for policy-makers and for future research.

Site Characteristics: Ho Chi Minh City is the biggest city in Vietnam, covering an area of approximately 2,000 square kilometers with a current population of about 5.5 million. The state-owned utility board, called the Water Supply Company (WSC), is responsiblefor service provision in Ho Chi Minh City, which includes public taps and private connections in households and enterprises. As of August 2003, the WSC controlled 321,537 private connections in Ho Chi Minh City. So far, private companies are not allowed to do business in this sector. Currently, Ho Chi Minh City has sufficient surface and ground water to meet its present needs. There is no water shortage even in the dry season. However, while the demand for domestic water is estimated at 1,250,000 cubic metersper day, the existing piped water capacity can only meet around 70 per cent of this demand.

Comments: Many of the households surveyed already had to do a lot - and spend a lot of money - to cope with the unreliable, poor-quality public water supply they currently use. The report also finds that households without piped water are more willing to pay for improved services than those that already enjoy a fixed supply, and that 'non-piped' households place more importance on water quality than water pressure.

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