Socioeconomic and Environmental Determinants of Household Willingness to Pay for Improved Electricity Services: A Case Study of Nowshera, Pakistan

Abstract

Electricity is critical to our daily lives, and frequent interruptions in the electricity supply impact not only industrial productivity and economic growth but also disrupt household activities and daily routines. This study aims to determine the factors influencing a household's willingness to pay additional charges for improved electricity service. The study collected primary data through the contingent valuation method from 285 households from Nowshera, Pakistan, and applied binary logistic regression estimation. The findings show that a household's education level, household size, monthly income, monthly electricity bill, and service reliability significantly influence consumers' willingness to pay additional charges to get satisfactory electricity service. Furthermore, as various household activities rely on electricity, households are typically willing to pay an extra amount for better electricity service. The study also highlights that environmental awareness and attitudes towards renewable energy resources influence consumer preferences. Furthermore, those who are more conscious of sustainability exhibit a greater willingness. This study is unique in that it comprehensively assesses the socioeconomic and behavioural aspects affecting the willingness to pay for reliable power in a developing country, specifically Nowshera, Pakistan. Unlike earlier studies, it investigates the impact of household activities on willingness to pay, shedding light on how cultural, religious, and social interactions influence energy preferences. Furthermore, the study emphasizes the adoption of renewable energy as an electricity service for the consumer, providing a dual benefit of improved service reliability and a sustainable energy source.