Study of Adequate Benefit Index of Water Supply and Sewerage Systems for Developing Countries

Abstract

 Mortality risk due to water pollution is one of serious problems especially for Asian developing countries. The timing to carry out a policy or project against such a problem is typical debate issue. In our precedent research, with survey data sets in Vietnam and Laos asking citizens' willingness to pay for mortality risk reduction, we found a robust relationship between their age and WTP (=Option Price) in both of theoretical and econometric perspectives. In this study, we also derive Option Value, namely a non-use value of the hypothetical water service. For a reason that there is a number of insolvent people to pay the fee in developing countries, we propose an alternative benefit index which is combined with Option Price and Option Value properly. Finally, regarding this measurement and comparing with the countries those had sufficient water and sewage system sufficiently, we examine the relationship between Environmental Kuznets Curve Hypothesis and our analytical results.