Willingness to pay for drinking water in developing countries: A case study of Espirito Santo, Brazil

Most of the expected increase in world population is anticipated to take place in urban centers of developing countries. The increase in urban population adds more pressure on natural resources (e.g., air and water) in these crowded centers. In fact, access to safe potable water is already a significant problem.;Many households in urban areas of developing countries shift significant resources into treating water for drinking consumption. A recent study done by the World Bank reveals that in Jakarta households spend more than ;Consumers' willingness to pay for higher quality drinking water reveals the benefits from improving the quality of drinking water. Although valuation methods exploring the use of defensive expenditures to estimate the benefits (damages) to the population resulting from high (low) environmental quality exist, successful empirical applications are rare for marginal improvements, and only Bartik's (1988) approach has been used to value non-marginal improvements in drinking water quality. In this dissertation, I use a nested logit model to obtain parameters for welfare estimation of the benefits from non-marginal improvements in tap water quality in Brazil. The results from the welfare estimation above are compared with the benefits calculated using the contingent valuation approach.