The objective of this study was to estimate the economic value that people living in Loja, Ecuador, place on the protection of two basins when the protection is designed to improve both the quality and reliability of the water supply for human consumption by urban residents. Empirical results indicate that households have an average willingness to pay (WTP) of $5.80 per month to preserve the basins. The main variables affecting WTP are current monthly water cost, perception about the fairness of the existing water price, the number of hours that service is available, and the gender of the individual interviewed. The results of this study, and the later implementation by the Loja City Municipality of a basin protection project funded through a fee on water users, provide evidence that households at all income levels strongly support and are willing to pay for a project that has the potential to improve the quality of water services and protect the environment.
Keywords: Basin protection, Contingent valuation, Ecuador, Loja