Sunday, June 3, 2012

Households’ Willingness to Pay for Improved Urban Waste Management in Mekelle City, Ethiopia

Abstract: Cities in developing countries experiencing rapid urbanization and population growth too often lack the financial resources and institutional capacity to provide needed municipal infrastructure for adequate solid waste management, despite citizens’ demand for it. This paper uses a cross-sectional survey of 226 randomly selected households in Mekelle City, Ethiopia, to assess the current municipal sanitation fees and the willingness to pay (WTP) of residents for improved urban waste management, and suggests mechanisms for cost recovery. We used Tobit and probit models in the empirical analysis to determine the factors that influence households’ WTP for improved solid waste management. Results reveal that residents’ WTP for improved solid waste management is significantly related to income and awareness of environmental quality, among other factors. Study results reveal that the current city fee for sanitation is far below the WTP of the residents. The mean WTP we found can be a guide for municipal officials in setting a more appropriate fee that can finance improvements in city SWM, where all households receive collection services, waste is disposed of properly, and recycling and composting features are added.
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Mekelle City is the capital of Tigrai National Regional State, with a population of about 257, 290, an annual growth rate of 5.4 percent, and an average family size of 5 people (FDRE PCC 2008). The city generates about 0.3 kg of solid waste per capita per day (Tesfay 2004). This is low compared to other developing countries, such as Nepal, Bangladesh, and Cambodia, which generate 0.5–1.0 kg per capita per day (Zurbr├╝gg 2002). The city is the main collector of solid waste, employing 14 waste collection cooperatives  (mainly micro and small enterprises). Of these, 11 cooperatives handle house-to-house collection, 2 are street sweepers (only asphalt streets), and 1 gathers waste dumped in open spaces and near the communal containers. All waste collection cooperatives bring waste to the city’s communal refuse containers. Mekelle City pays the cooperatives ETB 33.303 per cubic meter (m3) of waste collected.  [ETB = Ethiopian birr. US$ 1 = ETB 9.7898 at the time of the study.]
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... during the first half of fiscal year 2007/2008, waste collection fees only brought in ETB 90, 283, while expenditures for the same six-month period were ETB 953,4225 (MCA 2007b). Basically, revenue from solid waste collection and disposal covers only 9.5 percent of the cost....
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... The average monthly income of the sample households was ETB 1,495.85, with a minimum monthly income of ETB 200 and a maximum of ETB 12,776. As the level of income and education increased, so did the percentage of yes responses for the improved SWM system....
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...In the close-ended format ... the mean WTP for improved solid waste management per household per month is ETB 11.89....
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... In the open-ended format ... the mean WTP is ETB 7.88 per household per month, which is less than but closer to the WTP obtained using the close-ended format. Therefore, households’ mean WTP for improved solid waste management is in the range of ETB 7.80–ETB 11.89 per month. Hence, we can calculate the monthly WTP for the city by multiplying this mean by the total number of households to get about ETB 532,536.05 per month. We can also estimate by aggregating WTP. Given the current population of Mekelle of 257,290, with an average family size of 4.76 (in the sample), the number of households is about 54,090....

The total monthly WTP of the city, using the mid WTP, is estimated at ETB 430,566 (table 7). Using the dichotomous single bounded question, the monthly WTP is estimated at ETB 532,536.05. The actual WTP of the households in Mekelle City falls between these two figures.

by Dagnew Hagos, Alemu Mekonnen and Zenebe Gebreegziabher
Resources For the Future (RFF) www.RFF.org
RFF Discussion Paper EfD 12-06; April, 2012

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