Similar to previous WTP studies on water quality issues (Eisen-Hecht, and Kramer, 2002;
Rodriguez, 2003; Johnson and Baltodano, 2004), the WTP question was asked after a statement
describing the current situation of the micro-basins and its contribution to Loja’s water supply.
This statement is designed to reduce the hypothetical bias regarding the knowledge individuals
have about watershed protection and the importance of the watershed to the quality of Loja’s
drinking water supply (see Appendix for the original Spanish version of the survey). Key points
included in the statement were: a) the uncertainty regarding the future supply of water to the city
given current population growth and the ongoing deforestation and degradation of the micro-
basins that provide water to the city; b) the presence of private owners in the micro-basins
devoted mainly to agriculture and livestock production and the risk of water contamination
resulting from these activities; c) the description of a potential management plan for the area that
includes purchasing the land from private owners, reforestation and protection of the area; and d)
an explanation regarding the fact that the current cost of water only covers treatment and
distribution costs. After this statement the following WTP question was asked (see Appendix for
the original Spanish version of the question): “How much would you be willing to pay in your
monthly water bill in order to buy the land of the “El Carmen” and “San Simon” micro-basins
to establish a management plan that includes reforestation, protection and maintenance of the
area in order to improve the quality and amount of water collected? $ _____________”
Regression Analysis
Using a Tobit model we regressed respondents’ WTP for the basin conservation and
protection plan against a series of explanatory variables listed in table 1 to explore the influence
these variables have on household WTP for the resource management plan. The Tobit model was