Choice experiments in the estimation of welfare measures and policy prioritization in Basic Sanitation

Abstract

The aim of this study is to estimate the potential economic benefits of an integral improvement in the provision of basic sanitation services (water, sewage and treatment) through the choice experiment (EE) with multinomial logit models and mixed logit. 392 surveys were conducted on users of basic sanitation services in the city of Puno. Using the mixed logit model-dummy codes, an aggregate marginal willingness to pay (MWTP) of S/9.95/month/household was estimated. Based on the logit multinomial model-effect codes, it was possible to estimate the compensatory variation (CV) in S/9.11/month/household. When comparing both results, it is concluded that there are no significant differences, therefore, any of these monetary welfare measures, when aggregated in terms of the population potentially benefiting from the change, could be used as a measure of economic benefit if a Cost-Benefit Analysis were done. It has also been shown that the attribute "treatment" is more valued than the attributes "water" and "sewerage", therefore, any policy aimed at improving basic sanitation services in the city of Puno should be primarily focused on solving the wastewater treatment. The choice of alternatives for improvement in basic sanitation services is conditioned by the educational level and the monthly monetary income of the users.