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Introduction: Balancing the demand and supply of water amount is very critical. This study aims to estimate household’s willingness to pay for improved sustainable water supply services and to investigate its determinants. Methods: Quantitative research approach guided this study. To select the study participant’s simple random sampling technique was applied. Both primary and secondary data was used. Both descriptive and inferential statistics was used. Descriptive statistics like mean, standard deviation frequency, percent, table, and graphs were used. Multiple linear regression and correlation were used. Regression coefficient and Pearson’s correlation values were used to see the direction and strength of association. Significance level was determined based on p-value. Results: About 47.2% and 47.7% of the respondents were willing to pay 25-100 cents per jerrycan and >100 cents per jerrycan respectively. The average of Households Maximum Willingness to pay was 141 cents per jerrican ±112SD. The willingness to payment was range from zero cents to five birrs per Jerrican. In the current study the determinants of maximum willingness to pay were identified by using multiple linear regressions. Based on the finding of the study, age of household, occupational status of household, household income, perception level for quality of water, main source of water being used, respondent’s level of satisfaction with the existing service, initial bid, willing to pay initial bid and reliability were significantly associated with maximum willingness to pay. Higher age group, employed in private sector and government sector, higher household income, good perception, having private connection, not being satisfied with the existing water source service, willing to pay initial bid and reliability were the categories of the variables which were increase willingness of pay for improved water source. In the current study sex, marital status, education, family members suffer from water born disease and year of stay were not significantly associated with MWTP for improved water source.
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