Urbanization and economic development cause water pollution in the inner-city canals and rivers globally. Bung Xang canal in Can Tho city of Vietnam is facing problems with water pollution due to the lack of centralized wastewater treatment plants and low public awareness on environmental protection. Perception of local residents was collected using structured questionnaires including both qualitative and quantitative information. Regression analysis was employed to evaluate the factors affecting the decision of respondents on the willingness to pay (WTP) to improve water quality in the Bung Xang canal. Knowledge about the environmental protection fee for domestic wastewater (10% of the VAT-excluded from the selling price of 1 m³ of tap water purchased), age of the respondents and their education levels affected the WTP positively, while respondents’ perception on water quality affected the WTP negatively. There was 58.33% of the respondents showed the WTP for improved water quality in the canal. They agreed to pay a small fee of VND 10,000 to 15,000 (equivalent to USD 0.42-0.63)/month (1 US$= 23,700 VND). The result indicates that environmental education is the only way forward for a successful sustainable urban city.