  Many Stated Preference studies conducted in developing countries provide a
low willingness to pay (WTP) for a wide range of goods and services. However,
recent studies in these countries indicate that this may partly be a result of
the choice of payment vehicle, not the preference for the good. Thus, low WTP
may not indicate a low welfare effect for public projects in developing
countries. We argue that in a setting where 1) there is imperfect
substitutability between money and other measures of wealth (e.g. labor), and
2) institutions are perceived to be corrupt, including payment vehicles that
are currently available to the individual and less pron to corruption may be
needed to obtain valid welfare estimates. Otherwise, we risk underestimating
the welfare benefit of projects. We demonstrate this through a rural household
contingent valuation (CV) survey designed to elicit the value of access to
reliable irrigation water in Ethiopia. Of the total average annual WTP for
access to reliable irrigation service, cash contribution comprises only 24.41
%. The implication is that socially desirable projects might be rejected based
on cost-benefit analysis as a result of welfare gain underestimation due to
mismatch of payment vehicles choice in valuation study.
