The self-reported average monthly household water bill is $19.60. Our findings differ from
previous studies conducted in developing countries where household WTP for improved water
supply security more than doubled their current water service payment (Montes de Oca et al.,
2003; Rodriguez, 2003; Casey et al., 2005; Katuwal and Bohara, 2007). However, our estimated
WTP value is very close to the 20% water consumption surcharge that households in the town of
Pimampiro in Northern Ecuador currently pay to finance a project for basin conservation, very
similar to the project intended for Loja (Wunder and Alban, 2008).
The Tobit model coefficient estimates and the calculated marginal effect values are
reported in Table 2. The current monthly amount being paid for water has a positive effect on
people’s WTP for basin preservation. Each additional dollar paid in the current average monthly
water bill increases WTP by $0.15 per month. For example, a household that has a monthly
water bill of $20 has a monthly WTP that is $1.5 greater per month than a household with a
monthly water bill of $10. This finding contrasts with results reported by Griffin and Mjelde
(2000) in a U.S. study which found that households having a higher monthly water bill refused to
pay more to avoid water shortages than those with a lower monthly water bill. In another U.S.
study, Loomis et al. (2000) found that households’ with a higher monthly water bill are more
likely than those with a smaller water bill to vote against a water conservation project that would
increase their water bill.
When the model was re-estimated using the ratio of monthly household WTP to the
current household monthly water bill as the dependent variable, it was found that the amount
currently paid for the water service has a negative effect on the percentage increase in the
monthly water bill that individuals are WTP for basin protection. In other words, despite the fact
that in absolute terms households with a higher monthly water bill have a greater WTP for basin