# RECORD 8acb5243fed06bb1f23f1332908a7f46169463e4
# TITLE: Willingness to Pay for Access to Piped Water using Hedonic Pricing Model
# YEAR: 2022.0  VENUE: Etikonomi  DOI: 10.15408/etk.v21i1.16984
# AUTHORS: A. Kiani; Zubaria Andleeb; Jawaid A. Qureshi
# PAGES: 10  CANDIDATE TABLE PAGES (1-based): [6, 7]
# ABSTRACT: The main objective of this study is to estimate the determinants of drinking water supply on the housing rental value using survey based data for the years 2013-14 in Pakistan. Hedonic pricing model is applied using rental value of the houses per month as dependent variable. Piped-water connection and number of rooms show significant impact on housing prices for both rural and urban. Using marginal implicit pricing method, Marginal willingness to pay (MWTP) is also calculated using the median of the rental values of the houses for both rural-urban regions and owned-rented houses. PKR 1676 and PKR 332 are willing to pay per month for urban and rural areas respectively to have quality of water inside their houses. On the same lines, PKR 1087 and PKR 521 are computed values of WTP for these who have their own houses and living on rent respectively.How to Cite:Kiani, A., Andleeb, Z., & Qureshi, J. A. (2022). Willingness to Pay for Access to Piped Water using Hedonic Pricing Model. Etikonomi, 21(1), 79-88. https://doi.org/10.15408/etk.v21i1.16984.


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Willingness to Pay for Access to Piped Water 
Using Hedonic Pricing Model
Etikonomi
Volume 21 (1), 2022: 79 - 88
P-ISSN: 1412-8969; E-ISSN: 2461-0771
Adiqa Kiani1*, Zubaira Andleeb2, Jawaid Ahmed Qureshi3
1Future Technology Research Centre, National Yunlin University of Science and 
Technology, Douliu, Taiwan
1,2Federal Urdu University of Arts, Science and Technology, Islamabad, Pakistan
3Shaheed Zulfikar Ali Bhutto Institute of Science and Technology, Pakistan
E-mail: 1adiqakian@gmail.com, 2zandlib@yahoo.com, 3jawedkhanqureshi@gmail.com
*)Corresponding Author
How to Cite:
Kiani, A., Andleeb, Z., & Qureshi, J. A. (2022). Willingness to Pay for Access to Piped Water using Hedonic Pricing 
Model. Etikonomi, 21(1), 79-88. https://doi.org/10.15408/etk.v21i1.16984.
JEL Classification:
G13
L95
Q53
Q25
Received: 16 August 2020
1st Revision: 12 September 2020
2nd Revision: 10 February 2021
Accepted: 15 March 2021
Abstract
The main objective of this study is to estimate the determinants 
of drinking water supply on the housing rental value using 
survey-based data for the years 2013-14 in Pakistan. The hedonic 
pricing model is applied using the rental value of the houses per 
month as the dependent variable. Piped-water connection and 
several rooms significantly impact housing prices for rural and 
urban. Using the marginal implicit pricing method, Marginal 
willingness to pay (MWTP) is also calculated using the median 
of the rental values of the houses for both rural-urban regions 
and owned-rented houses. PKR 1676 and PKR 332 are willing 
to pay per month for urban and rural areas, respectively, to have 
water quality inside their houses. On the same lines, PKR 1087 
and PKR 521 are computed values of WTP for those who have 
their own houses and living on rent, respectively.
Keywords:
willingness to pay, hedonic pricing models, access to clean water, 
unsafe water, metered connections


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Adiqa Kiani. Willingness to Pay for Access to Piped Water using Hedonic Pricing Model
http://journal.uinjkt.ac.id/index.php/etikonomi
DOI: htttp://doi.org/10.15408/etk.v21i1.16984
84
Table 1. Summary Statistics of the Variables
Variable
Obs
Mean
Std. Dev.
Min
Max
The rental value of the house per annum
15884
30495.8
26821.3
2400
120000
Piped water connection
15884
0.2303
0.4210
0
1
Number of rooms
15884
2.2240
1.2780
1
15
Availability of gas or not
15884
0.3056
0.4607
0
1
Garbage collected or not
15884
0.2093
0.4068
0
1
Neighbor pay for garbage collection
15884
6.4385
27.0579
0
600
Garbage collection from a neighbor
15884
2.7117
0.6107
1
3
Employment status
15884
1.1400
0.3469
1
2
Educated or not
15883
1.4427
0.4967
1
2
Income per month
15700
28182.8
12515.3
0
249000
Expenditure per month
15771
33767.0
15164.0
0
250100
Provinces of Pakistan
15884
2.3210
0.8784
1
4
Rural-urban region
15884
1.3242
0.4681
1
2
Age of a household
15884
45.1457
13.8027
15
99
For this purpose, a detailed breakup of the rent per month is given in Table 2. 
Table 2 shows that about 65 HH pay rent in the range of 2400-30000, rest of 35% 
(23% pay 30 thousand to 60 thousand, 60 thousand to 90 thousand pay 6.2%). Only 
5.1 HH out of 15884 pay more than 90k, only 5.1% of the sample.
Table 2. Main sources of Drinking water (2013-14)
What is the main source of drinking water
Frequency
Percent
piped water
4,421
24.58
hand pump
5,392
29.98
motorized pumping/tubewell
4,954
27.54
open well
612
3.4
closed well
185
1.03
pound/canal/river/stream
717
3.99
Spring
615
3.42
mineral water
48
0.27
tanker/truck/water bearer
638
3.55
filtration plant
349
1.94
Others
57
0.32
Total
17,988
100
Descriptive statistics of main variables used for the analysis using the Hedonic 
pricing model are shown in Table 3 shows that PKR 35265 is the rental value per month 
for urban, while PKR 12735 for rural. On average, around 24 thousand and 495 rupees 


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http://journal.uinjkt.ac.id/index.php/etikonomi
DOI: htttp://doi.org/10.15408/etk.v21i1.16984
85
Etikonomi
Volume 21 (1), 2022: 79 - 88
is the rent of house per month for overall Pakistan. Only 23% piped water connection 
(PWC) is available for households in Pakistan, where maximum urban households enjoy 
this facility and 45 % of urban HH have connections inside their houses. In comparison, 
only 13 % of rural have PWC inside their residents, and still, 87% are deprived of this 
facility and use other water sources.
Overall, in all regions, most people have two rooms accommodation, 69% have 
gas facility about 97% electricity facility. In contrast, 74% have toilets inside their house 
in urban areas, whereas in rural 88% are still deprived of gas facilities, and about half 
of the populations in rural still do not have toilets inside their houses.
We have a proper garbage collection system through community and self-help, and 
56% use this facility while still in rural they dump in open areas, and no system prevails 
for garbage collection. It also shows that urban areas for their garbage collection have paid 
only PKR 54 while it is quite nominal for the whole month, whereas rural residents pay 
PKR 4. Overall, the people of Pakistan for this facility have paid PKR 20. We have limited 
information for neighborhood characteristics in PSLM 2014-15. Only 0.4% of people of 
urban areas provide information about school distance from their residents, while 0.2% 
rural responded in this respect. We have covered 15884 household data in this study, out 
of which 32 % are urban HH while around 68 % belong to the rural part of Pakistan.
Table 3. Descriptive Statistics of Hedonic-related variables
Variable
Urban Region
Rural Region
Pakistan
Dependent Variable
Rent price per month(Pak rupees)
(35265)
(12735)
(24495)
Drinking water sources
Piped water connection (%)
(No of HH have PWC)
0.45
(2321)
0.13
(1337)
0.23
(3658)
Household characteristics
No. of room
The gas facility at home
Electricity facility at home
Toilet facility inside house
(2.34)
(0.69)
(0.97)
(0.74)
(2.16)
(0.12)
(0.86)
(0.54)
(2.21)
(0.30)
(0.89)
(0.50)
Environmental characteristics
Formal garbage collection
Payment for garbage collection/mth
(0.56)
(54.2)
(0.04)
(4.20)
(0.21)
(20.04)
Neighborhood characteristics
Formal garbage collection from 
neighborhood
Payment for garbage collection from 
neighborhood/mth
Distance to school
(2.91)
(17.30)
(0.004)
(2.29)
(1.22)
(0.002)
(2.71)
(6.44)
(0.003)
Total No. of HH 
(%age of total sample)
(5149)
(32.42)
(10735)
(67.58)
(15884)
(100)
It is pertinent to estimate rural and urban regions separately to capture the effect 
of water connectivity and housing prices in most rural regions. Water through pipes is 
unavailable, and rural regions sometimes have water facilities through boring tubewells, 


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Adiqa Kiani. Willingness to Pay for Access to Piped Water using Hedonic Pricing Model
http://journal.uinjkt.ac.id/index.php/etikonomi
DOI: htttp://doi.org/10.15408/etk.v21i1.16984
86
wells, lakes, and streams. Table 2 indicates the estimation results using equation (1) for 
the rural and rural regions and Pakistan overall. All variables are significant at 5% and 
consistent results except a few variables. Regression results for the urban region show that, 
for example, one unit increase in piped water connection, 8.45% rental value of a house 
increase as exp (0.07087) = 1.08454. No of rooms also vary significantly, contributing 
to enhancing the house rent. In order to increase the one room in a house, it increases 
the house rent by 26% as exp (0.20409) =1.26327. Similarly, the toilet facility inside 
the house is large, and every household prefers to have it inside their house. It also 
plays a significant part in increasing house rent, and it contributes significantly by 7.3% 
exp (0.06167) =1.07315.
We have also examined the willingness to pay off the HH for piped water 
connection by computing the implicit marginal price for the drinking water, and the 
results are presented in Table 4. We have used equation two and the median of the 
housing prices for both urban and rural regions and owned and rented houses for 
estimation. The median house rent for rural shows around PKR 12000 per month, 
and for urban it is up to PKR 23500, which is quite apparent. Also rented house 
and owned the house the median prices of the house as PKR 14000 and PKR 18000 
respectively.
Table 4. Calculation of Marginal Implicit Price (WTP) for Drinking Water
Rural
Urban
Coef
WTP 
(Pak Rs)
WTP towards 
Expenditures
Coef
WTP 
(Pak Rs)
WTP towards 
Expenditures
Drinking-Water 
Characteristics
0.0238
332
0.93%
0.07087
1676
3.05%
Median of house rent 
per month
12000
23500
Median of expenditure 
per month
35684
55000
Rented House
Owned-house
Drinking-Water 
Characteristics
0.03192
521
1.21%
0.05122
1087
1.46%
Median of house rent 
per month
14000
18000
Median of expenditure 
per month
43210
74321
Marginal willingness to pay is calculated for both, and it shows that in rural parts 
of Pakistan, people are willing to pay PKR 332 to avail of this facility, which is 0.93% 
of their running expenditures. Also, for the urban art of Pakistan, people are already 
paying some nominal amount for the water usage as water bills. This study shows that 
they are willing to pay PKR 1676 per month, which is 3.05% of their expenditures, 
providing clean water inside their houses. Our results are consistent with Caroline and 
Celine (2012) and Dendup et al. (2015). The rented and owned house dwellers are