Understanding demand for higher quality sanitation in peri-urban Lusaka, Zambia through stated and revealed preference analysis

Abstract

Poor peri-urban sanitation is a significant public health problem, likely to become more important as the world rapidly urbanizes. However, little is known about the role of consumer demand in increasing peri-urban sanitation quality, especially for tenants using shared sanitation as only their rental choices can be observed in the market. We analyzed data on existing housing markets collected between 9 Jun and 6 Jul 2017 using the Hedonic Pricing Method (HPM) to capture the percentage of rent attributable to sanitation quality (n = 933). We also conducted discrete choice experiments (DCEs) to obtain willingness to pay (WTP) estimates for specific sanitation components (n = 1087), and explored the implications by estimating the proportion of plots for which improved sanitation quality would generate a higher return on investment for landlords than building a place for an additional tenant to live. The HPM attributed 18% of rental prices to sanitation (∼US$8.10 per month), but parameters for several components were poorly specified due to collinearity and low overall prevalence of some products. DCEs revealed that tenants were willing to pay $2.20 more rent per month for flushing toilets on plots with running water and $3.39 more per month for solid toilet doors, though they were willing to pay little for simple hole covers and had negative WTP for adding locks to doors (-$1.04). Solid doors and flushing toilets had higher rent increase to cost ratios than other ways landlords commonly invested in their plots, especially as the number of tenant households on a plot increased. DCEs yielded estimates generally consistent with and better specified than HPM and may be useful to estimate demand in other settings. Interventions leveraging landlords' profit motives could lead to significant improvements in peri-urban sanitation quality, reduced diarrheal disease transmission, and increased well-being without subsidies or infrastructure investments by government or NGOs.

Keywords: Discrete choice experiments; Hedonic pricing; Landlords; Peri-urban; Sanitation; Tenants; Willingness to pay; Zambia.