The Role of Religiosity in Analyzing Households’ Willingness to Pay for Water

Abstract

This paper analyzes how religious beliefs affect willingness to pay (WTP)
for water, apart from the conventional factors identified in the literature. The
motivations behind this exploration are multiple. Firstly, the recently presented
Divine Capital Model (Hamdani, 2012) 14 claimed that the Divinely attributes
such as spirituality, religiosity, ethics and reinforcing infrastructures
significantly affect the human decisions for time and resource allocation.
Secondly, a preliminary evidence (Attique, 2013) shows that religious beliefs and
attitudes15 have a stronger influence on households’ WTP for water. Using the
Divine Capital Model, the present study modeled the WTP for water to see the
effect of economic and non-economic factors.
The study is based on data from 245 households in District Rawalakot in
the state of Azad Jammu and Kashmir Pakistan, where availability of water and
access to improved and better water system is an issue. The empirical analysis is
carried out using the Ordinary Least Square (OLS) method of estimation. The
findings indicate that religious variables, i.e. prayers, belief, practices have a
significant effect on the sample households’ WTP for water. The results of the
study also reveal that households with a higher expenditure are willing to pay
more for an improved and better water system. This finding is consistent with the
environmental economic theory which stipulates that demand for improved
environmental quality increases with income. Education level of head of
household is positively influencing WTP for water, which stems from the fact that
educated people are more willing to pay for improvements in water quality
because they can value it. These findings have many implications; there is a scope to improve water services in view of the Divinely attributes of people,
government can enhance people’s participation in water improvement schemes
through Religious motivation of people.