to ask individuals their willingness to pay for a specified level of change in an environmental
resource (Mitchell and Carson, 1989). CV has been used in several countries to measure the
value of household water quality improvements (Whittington, 1998; Rodriguez, 2003).
Measuring household willingness to pay for drinking water improvement using the CV method
has credibility for two reasons. First, respondents are asked to impute their willingness to pay
for a well-defined and well understood good with primarily personal use benefits. Second, it is
possible to compare the survey results with actual behavior when the water improvement project
is implemented (Goldblatt, 1999).
A person to person household survey of a random sample of Loja’s water service
consumers was conducted in December, 2005. The survey generated 106 observations, but only
100 were usable because 6 households were not connected to the city’s water supply system. In
addition to the CV question, the survey collected information on the demographic and socio-
economic characteristics of the respondents, perceptions about the water supply services and
administration, and the price paid for the service.
The contingent valuation questions were asked using an open-ended elicitation format.
This elicitation technique consists in directly asking the survey individual the maximum
monetary value the respondent is willing to pay for a specific change in a public good
(Venkatachalam, 2004). As is common to other elicitation formats, the open-ended format has
strengths and weaknesses. For example, Loomis (1990) notes the answers to open- ended
question do not have starting point bias and have the same reliability as dichotomous choice
estimates. However, open-ended questions are more difficult to answer than closed-ended ones
and can induce to strategic bias in respondents (Hanemann, 1994).
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