This paper analyzes the welfare effects of improved health status through increasedwater quality using a choice experiment. The survey was administered to a randomsample of households in metropolitan Cairo, Egypt. We apply a random parameterlogit model in the analysis and illustrate the richness of information that can beobtained from this type of model by estimating individual level willingness to pay(WTP). We find a significant WTP for improved health status, both for short-run andlong-run health effects. However, the estimated WTP is fairly low compared with thecosts of a program that would achieve these improvements.