The Economic Value of Basin Protection to Improve the Quality and Reliability of Potable Water Supply: Some Evidence from Ecuador

Baltodano (2004) found that males place a higher value on improving water quality and quantity,
contrary to other WTP studies for improved water services in Latin America (Perez-Pineda,
1999; Montes de Oca et al., 2003) where females were found to more highly value water service
improvements.

Regarding the effect of timely access to water and the perception variables it is unclear
which sign these variables should take. Households that have access to water 24 hours per day
are likely to be satisfied with the current service and might not have any motivation to pay for
service improvements. However, households currently paying for an inadequate service or a
service that is perceived as inadequate may be disinclined to pay even more.

Of all the perception variables included in the model, only the variable related to water
cost, the water tariffs, was statistically significant. However, only 26 percent of surveyed
individuals perceived their water bill as expensive.

We should point out that our results might not be directly comparable to prior studies that
examine individually consumer valuation of watershed improvements or water supply
enhancements. The focus of the WTP question in this study was on protecting a basin to
improve residential water quality and supply conditions. In addition to improving the quality
and supply of water to the city Loja, the basin protection plan is likely to improve wildlife and
ecological values which are unmeasured in this study.

Aggregate Benefits and Costs

As previously mentioned, in 2006 there were 24,587 households connected to UMAPAL’s water
system in Loja. Using the estimated average household WTP value of $5.80 per month, the total
aggregate value of preserving the two micro-basins is $142 thousand per month or $1.7 million

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