This paper studies household demand for improved water quality in peri-urban Cambodia, with particular attention paid to the influence of water quality on willingness to pay (WTP). Utilizing data from 915 household surveys, we analyze responses to a contingent valuation scenario using multivariate logit regression techniques that account for subjective perceptions of water quality. We estimate a mean household WTP for improved water quality of US$3 (roughly 1.2% of mean income) per month for households in this sample. We also find that the majority of households believe that their in-house water after storage, handling, and treatment is safe to drink. Furthermore, beliefs about existing levels of water quality have a significant impact on WTP for improved water quality. However, while perceptions of quality (and thus WTP) are highly related to taste preferences, actual water quality is relatively uncorrelated with water quality perceptions. These findings suggest that interventions aiming to increase the adoption of water treatment should account for underlying perceptions of water quality.

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