Willingness to pay before and after program implementation: the case of Municipal Solid Waste Management in Bally Municipality,India

This paper identifies the factors that influence perception of program benefit of the recipients when a hypothetical public program is implemented in reality. We compare pre- and post-program Willingness to pay (WTP) estimates for improved waste management in Bally Municipality, India, and find that post-program predicted WTP falls by more than 50 % even when if there are substantial improvements in urban environment. We show that this can be explained by the relative strength of leisure cost of effort to participate in the waste management program vis-à-vis the benefit derived from cleaner environment. Our study shows that mismatch between expected and offered service attributes might be a source of disutility and could also dampen households’ perceived value of the program benefits. In such cases, the reduction in WTP might act as an indication of the local bodies regarding the scale of outreach and expansion of the program needed to finance the operation and maintenance expenses by supplementing the property tax bases through user fees.