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The willingness to pay for in‐house piped water in urban and rural I ndonesia
Author(s) -
Suparman Yusep,
Folmer Henk,
Oud Johan H.L.
Publication year - 2016
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/pirs.12124
Subject(s) - willingness to pay , business , agricultural economics , economics , microeconomics
This paper analyses household preferences for in‐house piped water in urban and rural I ndonesia via a hedonic price model, specified as a constrained autoregression‐structural equation model ( ASEM ). ASEM reduces bias due to time‐varying omitted variables and measurement errors. In addition, it provides a convenient way of testing and correcting for endogeneity. On the basis of the I ndonesia Family Life Survey data set, we find that on average urban and rural households have the same willingness to pay for in‐house piped water, that is, 34.24 per cent of their monthly house rent. For the 25 per cent urban and rural households with lowest expenditure, this percentage is equivalent to 9.41 per cent and 7.57 per cent of their monthly expenditure, respectively. The findings support a need for further investment in in‐house piped water in both areas, particularly for the households with the lowest expenditure levels.