Applying Heckman Model for Economic Valuation of Drinking Water in Hamadan Province

Water is a socio-economic commodity which is considered as a basic human need. Limited water resources in arid and semi-arid regions and increasing demand for water has led to water shortages, reduced reliability of water supply systems, and intensified competition and conflict between different sectors of water consumption. Limited water resources have also caused economic, environmental, social and political tensions. Among the various uses of water, urban drinking water has a higher priority due to health issues, basic human needs and the possibility of social tensions due to its scarcity.Water pricing as a tool for demand management, whether through administrative decrees or market forces, is the best approach to improve water allocation and protect water resources. Considering the importance of determining the economic valuation of water in the study area and with the aim of determining the customers' willingness to pay for quality drinking water, this study was intended to estimate the economic valuation of water in urban areas of Hamadan province.One of the methods of water valuation is measuring the willingness of consumers to pay higher prices for quality water. The contingent valuation method as a standard and flexible method is widely used for measuring the willingness of consumers to pay higher prices for quality water (Khodaverdizadeh et al., 2008). Comparing the willingness to pay in urban and rural areas in Kenya, Brouwer et al. (2015) found that rural households were more sensitive to prices than urban ones, and urban households were willing to pay more for quality water than villagers. Acey et al. (2019) also examined the willingness to pay for water by Kenyan citizens. The results showed that among citizens who were younger and richer, the willingness to pay was higher. Considering the importance of determining the economic valuation of water, this study was thus intended to determine the rate of willingness to pay for quality drinking water by the households in Hamedan province using a contingent valuation method.