Abstract: Cities in developing countries experiencing rapid urbanization and population growth too often lack the financial resources and institutional capacity to provide needed municipal infrastructure for adequate solid waste management, despite citizens' demand for it. This paper uses a cross-sectional survey of 226 randomly selected households in Mekelle City, Ethiopia, to assess the current municipal sanitation fees and the willingness to pay (WTP) of residents for improved urban waste management, and suggests mechanisms for cost recovery. We used Tobit and probit models in the empirical analysis to determine the factors that influence households' WTP for improved solid waste management. Results reveal that residents' WTP for improved solid waste management is significantly related to income and awareness of environmental quality, among other factors. Study results reveal that the current city fee for sanitation is far below the WTP of the residents. The mean WTP we found can be a guide for municipal officials in setting a more appropriate fee that can finance improvements in city SWM, where all households receive collection services, waste is disposed of properly, and recycling and composting features are added.
The total monthly WTP of the city, using the mid WTP, is estimated at ETB 430,566 (table 7). Using the dichotomous single bounded question, the monthly WTP is estimated at ETB 532,536.05. The actual WTP of the households in Mekelle City falls between these two figures.