ESTIMATION OF ECONOMIC BENEFITS FOR IMPROVEMENTS IN BASIC SANITATION SERVICES USING THE CONTINGENT VALUATION METHOD

Abstract

The management of basic sanitation services in Peru is considered a high-priority public policy and, given that the exercise of government budget is very limited by public resources, estimating the economic benefits that will result from the execution of projects that improve sanitation management is an important issue. The objective of this study was to estimate the potential economic benefits of a comprehensive improvement to basic sanitation services (water, sewer, and treatment), using the Contingent Valuation Method (CVM) with referendum and double-bounded formats. Threehundred ninety-two users were polled about basic sanitation services in the City of Puno, Peru. The double-bounded CVM showed higher theoretical consistence. The socio-economic variables and the degree of awareness about the problems in the basic sanitation services were more important to estimate the willingness to pay (WTP). The estimated WTP was $8.53 soles per month per house (US$2.84). Considering the total number of beneficiary households, this amount represents a measurement of the economic benefit in the cost-benefit assessment of the improvements that were proposed.