Households’ preferences and willingness to pay for multiple use water services in rural areas of South Africa: An analysis based on choice modelling

Abstract

Financing of multiple use (i.e. domestic and productive) water services was identified as an important ingredient to ensure improved water access for rural poor and broaden livelihood options in South Africa. Following the principles of integrated water resource management (IWRM), efficient, equitable and sustainable investments in improved water services should be based on a thorough understanding of actual demand by consumers. Comprehensive studies looking at multiple use water services are not common in South African rural areas, where most of the economic analyses focus on either domestic or irrigation water demand. This study aims at filling this gap by assessing the household demand for multiple use water services in Sekororo-Letsoalo area in the Limpopo Province. Choice modelling is the approach used to identify the attributes determining demand for water services and quantify their relative importance. Results show that households in rural areas are willing to pay for improvements in water services. Due to the current poor level of water services in the area, users are primarily concerned with basic domestic uses and, consequently, demand for productive uses is low. Only households already relatively well served are interested in engaging in multiple water uses.

Keywords: choice modelling, multiple water uses, domestic water demand, water services, willingness to pay