The welfare costs of unreliable water service

Abstract

Throughout the developing world, many water distribution systems are unreliable. As a result, it becomes necessary for each household to store its own water as a hedge against this uncertainty. Since arrivals of water are not synchronized across households, serious distributional inefficiencies arise. We develop a model describing the optimal intertemporal depletion of each household's private water storage when it is uncertain when water will next arrive to replenish supplies. The model is calibrated using survey data from Mexico City, a city where many households store water in sealed rooftop tanks known as tinacos. The calibrated model is used to evaluate the potential welfare gains that would occur if alternative modes of water provision were implemented. We estimate that most of the potential distributional inefficiencies can be eliminated simply by making the frequency of deliveries the same across households which now face haphazard deliveries. This would require neither costly investments in infrastructure nor price increases.

Intermittent Domestic Water Supply: A Critical Review and Analysis of Causal-Consequential Pathways

“…Each condition is placed in one of five categories, discussed below. Broadest network distribution prioritized Local Governance -Low prices [15] -Water rationing by utility [107] -Network stretched beyond capacity to deliver continuous supply [5,81] -Intermittent supply [2,43,111,113] Consumers overdraw Consumer Response -Water losses/less water in system [32,48] Coping mechanisms among the most impoverished are not observed or understood Local Governance -Politicians do not believe the poor are willing to pay for water [94,127] Demand-supply gap widens Large-Scale Trend -Water rationing by utility [7] We identified a total of 106 cause-consequence pathways between 47 conditions of water intermittency. Table 2 lists each condition in alphabetical order, and the conditions that arise consequentially according to the literature, with citations provided.…”

“…"Serving the last mile" can be complicated by socio-political issues such as secure land tenure or steady income [130], but has its basis in equity when planners choose to provide water to as many people at the lowest prices possible [2,5,113]. However, researchers have found that prioritizing broad distribution can cause water rationing [107], low prices [15], network stretch [81] and, generally, intermittent supply [2,43,111,113].…”

“…mechanical failures [among other relationships], water service is notoriously unreliable." [5] Similarly, the pathway intermittent supply Ñ access inequality is drawn from the following citations: "Due to intuitively operated intermittent water distribution, supply times usually differ throughout the supply system. As a consequence, the supply is inequitable regarding the quantity supplied."…”

Factors Determining Household Consumer’s Willingness to Pay for Water Consumption in Malaysia

“…The literature for example has reported on the importance of water taste compared to odor and color (Doria, 2010;Warren, 1996), on how water users are willing to pay more for better water taste (e.g. Beaumais et al 2010), to reduce water contamination (Cho et al, 2005;Khan, Iqbal, Saeed, & Khan, 2010;Malik et al, 2012) and to be provided with uninterrupted water supply (Baisa et al, 2010;Hensher et al, 2005;Olanrewaju et al, 2012;Vasquez, 2009).…”

“…Some studies in the literature suggest that improvement of water service through uninterrupted water supply is crucial in developing countries (Baisa, Davis, Salant, & Wilcox, 2010;Whittington, Pattanayak, Yang, & Kumar, 2002). Urban household residents in wealthier countries such as Australia are found to be willing to pay to reduce the frequency and duration of water service interruptions; however, willingness to pay is lower when households face more interruption per year (Hensher et al, 2005).…”