Willingness to pay (WTP) is the maximum amount a person would be willing to pay, sacrifice or exchange in order to receive a good or service (such as clean water supply) or to avoid something (such as ill health because of unsafe water supply). WTP is the corollary of willingness to accept payment (WTA), which is the minimum amount an individual, is willing to receive to give up a good/service or to accept something undesirable (such as compensation due to involuntary resettlement).
Conceptually, determining the WTP level is constructed by starting with a high price; asking potential buyers how many items or how often they would be willing to buy at that price; decreasing the price and repeating the process. These iterations will eventually set the market demand curve.
Several methods have been developed to measure consumer willingness to pay. These methods can be differentiated whether they measure consumers' hypothetical or actual willingness to pay and whether they measure consumer willingness to pay directly or indirectly.