This paper investigates two complementary pieces of data on households’ demand for improved water services, coping costs and willingness to pay (WTP), from a survey of 1500 randomly sampled households in Kathmandu, Nepal. We evaluate how coping costs and WTP vary across types of water users and income.
We find that households in Kathmandu Valley engage in five main types of coping behaviors: collecting, pumping, treating, storing, and purchasing. These activities impose coping costs on an average household of as much as 3 U.S. dollars per month or about 1% of current incomes, representing hidden but real costs of poor infrastructure service. We find that these coping costs are almost twice as much as the current monthly bills paid to the water utility but are significantly lower than estimates of WTP for improved services. We find that coping costs are statistically correlated with WTP and several household characteristics.
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