Willingness to pay for improved water services in mining regions of developing economies: Case study of a coal mining project in Thar coalfield, Pakistan

Abstract

Local communities in mining regions are vulnerable to water scarcity risks caused by extensive mining and changing climate. To mitigate such risks, we adopt a non-market valuation of low income communities' preferences for improved access to water services, as an effort to develop pro-poor policies that bring long-term water security and benefits to the local people. Using data collected from 268 households from the mining site in the Thar coalfield (Pakistan), we examine the household willingness to pay (WTP) for all major uses based on hypothetical policy scenarios. Results show that the mean WTP was estimated to be PKR 3921 (USD 38) for risk averting services (S1) and PKR 4927 (USD 48.13) for domestic pipelines and more decentralized water systems (S2) per month. We found that the mean WTP for S1 is 11.8% and for S2 is 16.6% more than the existing water-related expenditures of households. Age of household head, income level, project employment, livestock, farm income, and water quality are the significant factors influencing their WTP. These findings provide empirical evidence to policymakers and resource managers to implement cost-effective water management plans that provide multiple ecosystem service benefits, thereby potentially aiding pro-poor and sustainable economic growth in mining regions.