Financial sustainability of rural water systems in the Philippines is
evaluated based on a comparison of willingness to pay for improved wat
er and the costs of service delivery. Willingness to pay estimates ind
icate that user fees are unlikely to be sufficient to cover the full c
ost of service and subsidies are necessary, at least for a major porti
on of capital costs, or the Water systems will become unsustainable be
cause of insufficient resources. Sustainability is more probable when
care is exercised in selecting villages for improved water services. E
conomies of scale lead to lower unit costs in larger villages. Willing
ness to pay is greater for household connections than for public fauce
ts. Willingness to pay increases with income and wealth, family size,
education, and dissatisfaction with traditional water sources.