Water borne diseases due to contaminated water remain a serious problem in most of the developing world, although it consumes a larger portion of municipal budgets. The situation is serious in Sialkot district of Pakistan where ground water is contaminated due to improper disposal of their effluents waste water. The current study was designed to find the determinants of willingness to pay (WTP) by households for clean water supply and major causes of major water borne diseases in the affected area. A contingent valuation survey approach and a stratified random sampling technique was applied. Sample size consists of two hundred sixty nine respondents. A double bounded dichotomous choice questions followed by an open ended question format was used to elicit WTP and maximum willingness of the respondents for clean water supply. Logit and Multiple Linear Regression Model is used as econometric tool to analyze the data. The results reveal that as income increases percent of the total respondents WTP increase, while multiple regression reveals a monthly mean WTP of Rs. 234.54 which is greatly affected by age, household income, education and environmental awareness i.e. respondents with higher household income and higher level of education are more WTP. Residents who are living closer to the tanneries are more affected and their WTP was higher. Supervisor: Dr. Usman Mustafa