Abstract: Using Miyun Reservoir as studied case of water source areas, neighboring villager's will-to-pay (WTP) for rural domestic pollution was evaluated by the contingent valuation method (CVM) along with determining the degree of the villagers' desire to improve the habitation around water source areas. The study lays the basis for protecting water source areas and improving rural environment. The research indicates the following: 77.7% of the villagers agree to pay for improving their living environment, with average per household WTP of 16.10 yuan·a^-1. WTP for environmental protection is related with the attitude and level of cognizance of environmental protection, education and income of villagers. Regional differences have little relevance with villagers’ WTP and distance from the village to the reservoir. However, the villagers’ WTP in eco-village is lower than that in normal villages. Increasing the educational level and income are the prime ways of enhancing the villager’s desire for improving environmental quality and management.