WILLINGNESS TO PAY (WTP) BY CONTINGENT VALUATION METHOD (CASE STUDY: WASTE MANAGEMENT SERVICES)

Abstract

There are difficulties to get the optimal price of public goods. This study aims to estimate an optimal price of waste management service by using the household’s WTP with the Contingent Valuation Method and to investigate the relationship between the characteristic of respondents with their WTP. Using a purposive random sampling technique, 200 households in Bandar Lampung City are selected. Questioners are designed with 8 options of waste management services with some more reasonable tariff.  In principle, households as beneficiaries will pay what they bid so they must bid less than their true WTP if they want to obtain surplus from the transaction. The result indicates that household's  WTP for waste management services is 200% higher than before if services are upgraded such waste is picked up every day in the morning. Other results indicate that the level of education, number of family, job, income, knowledge, and satisfaction of respondents to waste management services are positively correlated with their WTP. The government should review the tariff policy of waste management service to obtain an optimal price.