The study investigates willingness to pay for water supply services in Khulna, using a contingent valuation method. Since the large connection cost is regarded as one of the major obstacles to expand the piped network among the poor, the model explicitly incorporates the connection cost in addition to monthly charge. The study shows that both willingness to pay the monthly charge and willingness to pay the connection cost are higher for richer households. Policy simulation shows that poor households are less likely to be connected under flat rate tariff, and introduction of volumetric tariff will increase the coverage of poor households. The large connection cost is found to be a critical bottleneck to expanding the coverage for the poor. Reducing the connection charge by installment payment, or by
including the connection under a capital investment project, will significantly improve the inclusion of the poor in the proposed water supply scheme.