Assessing the financial and economic feasibility of rural water system improvements

Financial feasibility of a rural water supply improvement is based on the ability of households to pay for it and economic feasibility on willingness to pay, or benefit, compared to costs. A simple household budgeting methodology is presented which can be used to estimate the ability to pay of water users for a water supply improvement. The contingent valuation method and benefit transfer techniques can be used to estimate rural water supply benefits. Using these procedures, the desirability of investing in rural water improvements is analyzed for a particular application. These methodologies can help policy-makers assess the viability of proposed water supply projects.