1# RECORD 8acb5243fed06bb1f23f1332908a7f46169463e42# TITLE: Willingness to Pay for Access to Piped Water using Hedonic Pricing Model3# YEAR: 2022.0 VENUE: Etikonomi DOI: 10.15408/etk.v21i1.169844# AUTHORS: A. Kiani; Zubaria Andleeb; Jawaid A. Qureshi5# PAGES: 10 CANDIDATE TABLE PAGES (1-based): [6, 7]6# 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.v21i1.16984.789===== PAGE 1 (score 7, numeric-paren 0, table-words 1, var-words 5) =====1011Willingness to Pay for Access to Piped Water 12Using Hedonic Pricing Model13Etikonomi14Volume 21 (1), 2022: 79 - 8815P-ISSN: 1412-8969; E-ISSN: 2461-077116Adiqa Kiani1*, Zubaira Andleeb2, Jawaid Ahmed Qureshi3171Future Technology Research Centre, National Yunlin University of Science and 18Technology, Douliu, Taiwan191,2Federal Urdu University of Arts, Science and Technology, Islamabad, Pakistan203Shaheed Zulfikar Ali Bhutto Institute of Science and Technology, Pakistan21E-mail: 1adiqakian@gmail.com, 2zandlib@yahoo.com, 3jawedkhanqureshi@gmail.com22*)Corresponding Author23How to Cite:24Kiani, A., Andleeb, Z., & Qureshi, J. A. (2022). Willingness to Pay for Access to Piped Water using Hedonic Pricing 25Model. Etikonomi, 21(1), 79-88. https://doi.org/10.15408/etk.v21i1.16984.26JEL Classification:27G1328L9529Q5330Q2531Received: 16 August 2020321st Revision: 12 September 2020332nd Revision: 10 February 202134Accepted: 15 March 202135Abstract36The main objective of this study is to estimate the determinants 37of drinking water supply on the housing rental value using 38survey-based data for the years 2013-14 in Pakistan. The hedonic 39pricing model is applied using the rental value of the houses per 40month as the dependent variable. Piped-water connection and 41several rooms significantly impact housing prices for rural and 42urban. Using the marginal implicit pricing method, Marginal 43willingness to pay (MWTP) is also calculated using the median 44of the rental values of the houses for both rural-urban regions 45and owned-rented houses. PKR 1676 and PKR 332 are willing 46to pay per month for urban and rural areas, respectively, to have 47water quality inside their houses. On the same lines, PKR 1087 48and PKR 521 are computed values of WTP for those who have 49their own houses and living on rent, respectively.50Keywords:51willingness to pay, hedonic pricing models, access to clean water, 52unsafe water, metered connections535455===== PAGE 6 (score 17, numeric-paren 0, table-words 5, var-words 4) =====5657Adiqa Kiani. Willingness to Pay for Access to Piped Water using Hedonic Pricing Model58http://journal.uinjkt.ac.id/index.php/etikonomi59DOI: htttp://doi.org/10.15408/etk.v21i1.16984608461Table 1. Summary Statistics of the Variables62Variable63Obs64Mean65Std. Dev.66Min67Max68The rental value of the house per annum69158847030495.87126821.37224007312000074Piped water connection7515884760.2303770.421078079180Number of rooms8115884822.2240831.2780841851586Availability of gas or not8715884880.3056890.460790091192Garbage collected or not9315884940.2093950.406896097198Neighbor pay for garbage collection99158841006.438510127.05791020103600104Garbage collection from a neighbor105158841062.71171070.610710811093110Employment status111158841121.14001130.346911411152116Educated or not117158831181.44271190.496712011212122Income per month1231570012428182.812512515.31260127249000128Expenditure per month1291577113033767.013115164.01320133250100134Provinces of Pakistan135158841362.32101370.878413811394140Rural-urban region141158841421.32421430.468114411452146Age of a household1471588414845.145714913.80271501515199152For this purpose, a detailed breakup of the rent per month is given in Table 2. 153Table 2 shows that about 65 HH pay rent in the range of 2400-30000, rest of 35% 154(23% pay 30 thousand to 60 thousand, 60 thousand to 90 thousand pay 6.2%). Only 1555.1 HH out of 15884 pay more than 90k, only 5.1% of the sample.156Table 2. Main sources of Drinking water (2013-14)157What is the main source of drinking water158Frequency159Percent160piped water1614,42116224.58163hand pump1645,39216529.98166motorized pumping/tubewell1674,95416827.54169open well1706121713.4172closed well1731851741.03175pound/canal/river/stream1767171773.99178Spring1796151803.42181mineral water182481830.27184tanker/truck/water bearer1856381863.55187filtration plant1883491891.94190Others191571920.32193Total19417,988195100196Descriptive statistics of main variables used for the analysis using the Hedonic 197pricing model are shown in Table 3 shows that PKR 35265 is the rental value per month 198for urban, while PKR 12735 for rural. On average, around 24 thousand and 495 rupees 199200201===== PAGE 7 (score 40, numeric-paren 29, table-words 2, var-words 4) =====202203http://journal.uinjkt.ac.id/index.php/etikonomi204DOI: htttp://doi.org/10.15408/etk.v21i1.1698420585206Etikonomi207Volume 21 (1), 2022: 79 - 88208is the rent of house per month for overall Pakistan. Only 23% piped water connection 209(PWC) is available for households in Pakistan, where maximum urban households enjoy 210this facility and 45 % of urban HH have connections inside their houses. In comparison, 211only 13 % of rural have PWC inside their residents, and still, 87% are deprived of this 212facility and use other water sources.213Overall, in all regions, most people have two rooms accommodation, 69% have 214gas facility about 97% electricity facility. In contrast, 74% have toilets inside their house 215in urban areas, whereas in rural 88% are still deprived of gas facilities, and about half 216of the populations in rural still do not have toilets inside their houses.217We have a proper garbage collection system through community and self-help, and 21856% use this facility while still in rural they dump in open areas, and no system prevails 219for garbage collection. It also shows that urban areas for their garbage collection have paid 220only PKR 54 while it is quite nominal for the whole month, whereas rural residents pay 221PKR 4. Overall, the people of Pakistan for this facility have paid PKR 20. We have limited 222information for neighborhood characteristics in PSLM 2014-15. Only 0.4% of people of 223urban areas provide information about school distance from their residents, while 0.2% 224rural responded in this respect. We have covered 15884 household data in this study, out 225of which 32 % are urban HH while around 68 % belong to the rural part of Pakistan.226Table 3. Descriptive Statistics of Hedonic-related variables227Variable228Urban Region229Rural Region230Pakistan231Dependent Variable232Rent price per month(Pak rupees)233(35265)234(12735)235(24495)236Drinking water sources237Piped water connection (%)238(No of HH have PWC)2390.45240(2321)2410.13242(1337)2430.23244(3658)245Household characteristics246No. of room247The gas facility at home248Electricity facility at home249Toilet facility inside house250(2.34)251(0.69)252(0.97)253(0.74)254(2.16)255(0.12)256(0.86)257(0.54)258(2.21)259(0.30)260(0.89)261(0.50)262Environmental characteristics263Formal garbage collection264Payment for garbage collection/mth265(0.56)266(54.2)267(0.04)268(4.20)269(0.21)270(20.04)271Neighborhood characteristics272Formal garbage collection from 273neighborhood274Payment for garbage collection from 275neighborhood/mth276Distance to school277(2.91)278(17.30)279(0.004)280(2.29)281(1.22)282(0.002)283(2.71)284(6.44)285(0.003)286Total No. of HH 287(%age of total sample)288(5149)289(32.42)290(10735)291(67.58)292(15884)293(100)294It is pertinent to estimate rural and urban regions separately to capture the effect 295of water connectivity and housing prices in most rural regions. Water through pipes is 296unavailable, and rural regions sometimes have water facilities through boring tubewells, 297298299===== PAGE 8 (score 11, numeric-paren 3, table-words 3, var-words 1) =====300301Adiqa Kiani. Willingness to Pay for Access to Piped Water using Hedonic Pricing Model302http://journal.uinjkt.ac.id/index.php/etikonomi303DOI: htttp://doi.org/10.15408/etk.v21i1.1698430486305wells, lakes, and streams. Table 2 indicates the estimation results using equation (1) for 306the rural and rural regions and Pakistan overall. All variables are significant at 5% and 307consistent results except a few variables. Regression results for the urban region show that, 308for example, one unit increase in piped water connection, 8.45% rental value of a house 309increase as exp (0.07087) = 1.08454. No of rooms also vary significantly, contributing 310to enhancing the house rent. In order to increase the one room in a house, it increases 311the house rent by 26% as exp (0.20409) =1.26327. Similarly, the toilet facility inside 312the house is large, and every household prefers to have it inside their house. It also 313plays a significant part in increasing house rent, and it contributes significantly by 7.3% 314exp (0.06167) =1.07315.315We have also examined the willingness to pay off the HH for piped water 316connection by computing the implicit marginal price for the drinking water, and the 317results are presented in Table 4. We have used equation two and the median of the 318housing prices for both urban and rural regions and owned and rented houses for 319estimation. The median house rent for rural shows around PKR 12000 per month, 320and for urban it is up to PKR 23500, which is quite apparent. Also rented house 321and owned the house the median prices of the house as PKR 14000 and PKR 18000 322respectively.323Table 4. Calculation of Marginal Implicit Price (WTP) for Drinking Water324Rural325Urban326Coef327WTP 328(Pak Rs)329WTP towards 330Expenditures331Coef332WTP 333(Pak Rs)334WTP towards 335Expenditures336Drinking-Water 337Characteristics3380.02383393323400.93%3410.0708734216763433.05%344Median of house rent 345per month3461200034723500348Median of expenditure 349per month3503568435155000352Rented House353Owned-house354Drinking-Water 355Characteristics3560.031923575213581.21%3590.0512236010873611.46%362Median of house rent 363per month3641400036518000366Median of expenditure 367per month3684321036974321370Marginal willingness to pay is calculated for both, and it shows that in rural parts 371of Pakistan, people are willing to pay PKR 332 to avail of this facility, which is 0.93% 372of their running expenditures. Also, for the urban art of Pakistan, people are already 373paying some nominal amount for the water usage as water bills. This study shows that 374they are willing to pay PKR 1676 per month, which is 3.05% of their expenditures, 375providing clean water inside their houses. Our results are consistent with Caroline and 376Celine (2012) and Dendup et al. (2015). The rented and owned house dwellers are 377