Estimating willingness-to-pay and financial feasibility in small water projects in El Salvador

The study here uses a non-market evaluation technique – the contingent valuation method – to estimate the economic value that people in four semi-rural communities in El Salvador place on improved water quality and sanitation. The findings suggest that access to potable water and sanitation was a high priority for people living in those communities. In addition, their high willingness-to-pay for these improved services supports the argument that medium-sized water supply projects in El Salvador could be profitable from the private perspective. The concept of maximum willingness-to-pay, well understood, can help policy makers in setting water charges in developing economies. This study shows that designing financially feasible projects that have a positive impact on the social conditions in poor communities is possible.