Introduction

The Asia-Pacific region accounts for about 57 per cent (635 million) of the global population without safe drinking water and 72 per cent (1.88 billion) of the global population without proper sanitation (UNDP, 2006). Even among the urban households which have access to Water Supply and Sanitation (WSS) many receive low-quality services. The global agenda for poverty reduction stated in the Millennium Development Goals (MDGs) aims to halve the number of people without proper water supply and sanitation by 2015 (United Nations, 2005, ADB, 2005). Large amount of investment on WSS projects is required to achieve this goal. Mobilizing public and private sector financial resources and designing and implementing WSS projects are important tasks trusted upon the developing country governments and their development partners to achieve water related MDGs.

Willingness To Pay (WTP) data on improved water supply and sanitation services constitute the basis for assessing effective demand and benefits of WSS services projects. The WTP concept generally refers to the economic value of a good to a person (or a household), under given conditions. Net economic benefits of improved water services, in simple terms, are estimated as the difference between the consumers' maximum WTP for better services and the actual cost of the services. In addition to providing crucial information for assessing economic viability of projects, WTP data are useful for setting affordable tariffs, evaluation of policy alternatives, assessing financial sustainability, as well as designing socially equitable subsidies (Brookshire and Whittington 1993, Whittington 2002, Carson 2003, Gunatilake et al. 2006, van den Berg et al. 2006).