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Estimating Willingness-to-Pay Values to Improve the Quality and Reliability of Clean Water in Surabaya Households Nur Aini Hidayati1 1Universiti Kebangsaan Malaysia Ph.D Student and Airlangga University Lecturer, email: nuraini.hidayati@gmail.com Clean water plays an important role in every activity of mankind—in household, commercial, industrial, as well as public and social sectors. As the second biggest city after Jakarta, Surabaya faces a fundamental issue of basic needs, which is the poor quality of clean water for domestic use. Polluted water due to contaminations has been a daily issue in Surabaya. Surabaya has a per capita income of some USD4000. Given this circumstance, Surabaya citizens should be able to pay the basic household needs at any reasonable cost. The research question is to what extent the local water company (State Company for Water Utilities – PDAM) can provide affordable clean water for the Surabaya citizens. Therefore, the aim of this research is to estimate the economic value of clean water accrued to households in Surabaya city, the capital of East Java Province in Indonesia. The economic valuation was carried out by determining households- willingness to pay for improved water quality and reliability of supply through the Contingent Valuation technique. The valuation is limited to urban households in this context is PDAM subscriber. This paper results the aggregate value of water quality and reliability improvements have been substantial such that it warrants PDAM to improve the quality of pertinent services. However, such provision will be contingent on a further cost-benefit valuation based on its affordability of supply relative to demand. In terms of policy implications, the study strongly suggests the service provider to improve both the quality and reliability of the clean water. In particular PDAM should increase the access to clean water, minimize health risk, and improve production efficiency to enable the affordable pricing of clean water to the Surabaya citizens. Keywords: Demand for clean water, economic valuation, contingent valuation method