Estimating Willingness to Pay for Reservoir Quality Improvement using Binary Choice Model
The values of reservoir services has been neglected for many years. The reservoir services important for
sustained water flow and steady supply of ecosystem services for societal needs. Sermo Reservoir is the only reservoir in the
province of Yogyakarta Special Region which has a double function as a source of irrigation water and raw water of
Company Regional Water Supply (PDAM) Kulonprogo district as well as a tourist attraction. The high number of tourists
leads to an increase in the volume of waste due to limited facilities and bad habit of tourists. This study aims at determining
tourists' willingness to pay (WTP) for improved reservoir conditions and identifying the factors affecting WTP for improved
reservoir conditions. A contingent valuation method was employed to elicit the willingness to pay for improved reservoir
condition. A logistic model was used to determine tourists’ respons to WTP and factors conditioning the maximum amount
of their WTP. Findings indicates that majority of tourists are willing to pay more for improved reservoir condition.
Similarly, result reveals that income and the number of visits positively influence WTP for improved reservoir condition.
The results therefore, indicate that the high willingness to pay for improved reservoir condition support the argument that
Sermo reservoir are likely to be attractive for potential tourists in Kulon Progo district.
Keywords - Contingent valuation; reservoir; willingness to pay; binary choice; logistic model
JEL Classification - Q51, Q56