The Paradox of the Willingness to Pay: USPCASW Researcher Studies the Economics of Water in Pakistan

What value do people place on water? What are the attributes that influence those judgments, and what effect do they have on public policy in the developing world?

These questions have been driving the research of University of Utah graduate student and USPCASW research assistant Matt Kosko. “Institutions and the Willingness to Pay for Water in Pakistan” is the title of Matt’s PhD dissertation.

Using the tools of institutional economics, Matt is studying how people’s preferences and decisions are formed, specifically related to vital natural resources. In Pakistan, a country facing a mounting water crisis, there is a striking discrepancy between people’s need for safe and reliable water, and their willingness to pay for it. A trend Matt refers to as “the paradox of willingness to pay.”

In Pakistan, a country facing a mounting water crisis, there is a striking discrepancy between people’s need for safe and reliable water, and their willingness to pay for it.

Matt is using what economists refer to as “discrete choice experiments,” and “stated choice method surveys” to gather the data needed to inform his conclusions. His research has been helped through a partnership with the graduate school at Mehran University of Engineering and Technology in Jamshoro, Pakistan.

“The importance of willingness to pay lies in the funding model it implies,” Matt explains. “There isn’t a high degree of interest among some segments of the population to pay for water improvement; to pay for quality water.”

He sees implications, including a need for reform in public policy, coming from this trend.

Matt’s path to studying the economics of water in Pakistan began by taking an economics class at the University of Utah from Professor Tariq Banuri, the Associate Director of USPCASW. He knew he had the goal of working with the United Nations, and Dr. Banuri helped steer him in the direction of studying the economics of natural resources in the developing world through the lens of the value people place on water in Pakistan.

When asked if he is optimistic about the work ahead, and the pressures and realities facing the developing world, Matt explains: “When you see the resourcefulness in the way that people cope with their situations you have to have some optimism. That resourcefulness is going to extend to other challenges and to adapting to new ways of approaching the problems we face.”