Delivering safe and sustainable water supplies presents a fundamental challenge for an urbanizing planet. Approximately 1.5 million people migrate to cities and their peri-urban fringes each week, and the fastest growth occurs in small to intermediate sized cities where infrastructure and governance capacity lag (Birkmann et al., 2016).
... See More + Piped water systems are struggling to keep pace. In this context formal water markets have languished, while informal water markets have proliferated and thrived. This report takes stock of what is known about informal markets and asks whether they are exploit the needy, earn exceptional profits or in fact provide a valuable and cost-effective service to a vast unserved urban population. The cost of extending piped connections for a global population approaching 10 billion by 2050 is estimated to surpass $60 trillion in capital asset values (Larsen et al., 2016). This scale of investment is out of reach in many parts of the world where the need is greatest. There is increasing evidence that past paradigms may not be sufficient or scalable, highlighting the need for innovations and sparking interest in water markets to improve water allocation and water service delivery. In this context, there has been growing consideration of ‘off-grid’ alternatives for delivering on the Sustainable Development Goals (SDGs). Informal water markets, involving small scale water enterprises, are one example of this trend. This report takes stock of the global evidence on informal water markets with a primary focus on small-scale, private water service providers in urban contexts. The focus is on whether and how informal markets can be part of an overall strategy to provide safe, affordable and reliable water services, particularly for the poor. The report investigates the theory, evidence and gaps regarding informal markets for water services. The analysis draws on data from over 100 studies of informal urban water markets, published in the past forty years with a primary focus on the findings from the past 10 years. It also documents two in-depth studies from Kathmandu and Yemen, which provide insight from two regions at the leading edge of urbanization and fragility challenges, respectively.
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This paper summarizes the results of the Ganges Strategic Basin Assessment (SBA), a 3-year, multi-disciplinary effort undertaken by a World Bank team in cooperation with several leading regional research institutions in South Asia.
... See More + It begins to fill a crucial knowledge gap, providing an initial integrated systems perspective on the major water resources planning issues facing the Ganges basin today, including some of the most important infrastructure options that have been proposed for future development. The SBA developed a set of hydrological and economic models for the Ganges system, using modern data sources and modeling techniques to assess the impact of existing and potential new hydraulic structures on flooding, hydropower, low flows, water quality and irrigation supplies at the basin scale. It also involved repeated exchanges with policymakers and opinion makers in the basin, during which perceptions of the basin could be discussed and examined. The study’s findings highlight the scale and complexity of the Ganges basin. In particular, they refute the broadly held view that upstream water storage, such as reservoirs in Nepal, can fully control basin wide flooding. In addition, the findings suggest that such dams could potentially double low flows in the dry months. The value of doing so, however, is surprisingly unclear and similar storage volumes could likely be attained through better groundwater management. Hydropower development and trade are confirmed to hold real promise (subject to rigorous project level assessment with particular attention to sediment and seismic risks) and, in the near to medium term, create few significant tradeoffs among competing water uses. Significant uncertainties, including climate change, persist, and better data would allow the models and their results to be further refined.
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It is often argued that the true benefits of water resource development in international river basins are undermined by a lack of consideration of interdependence in water resource planning.
... See More + Yet it has not been adequately recognized in the water resources planning literature that overestimation of interdependence may also contribute to lack of progress in cooperation in many systems. This paper examines the nature and degree of economic interdependence in new and existing water storage projects in the Ganges River basin based on analysis conducted using the Ganges Economic Optimization Model. We find that constructing large dams on the upstream tributaries of the Ganges would have much more limited effects on controlling downstream floods than is thought and that the benefits of low-flow augmentation delivered by storage infrastructures are currently low. A better understanding of actual and prospective effects of interdependence not only changes the calculus of the benefits and costs of different scenarios of infrastructure development, but might also allow riparian countries to move closer to benefit sharing positions that are mutually acceptable.
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This issue of the World Bank research observer contains the following articles: the odds of achieving the MDGs; the challenges of bankruptcy reform; school feeding programs and development: are we framing the question correctly?
... See More + ; international grain reserves and other instruments to address volatility in grain markets; using contingent valuation in the design of payments for environmental services mechanisms: a review and assessment.
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As the use of payments for environmental services (PES) programs for conservation has grown in developing countries, the use of stated preference methods, particularly contingent valuation (CV) surveys, to estimate the maximum amount that users of environmental services (buyers) would be willing to pay has also increased.
... See More + This paper reviews 25 CV studies conducted in the context of PES programs (CV-PES) and assesses their quality and usefulness for designing PES programs. Almost all these studies attempt to estimate the demand of downstream water users for up-stream watershed protection and, more generally, for improved water services. Most studies were methodologically uninspired and generally low-quality applications of stated preference methods, with limited policy relevance. The quality and usefulness of CV-PES studies could be substantially improved at only a modest increase in costs.
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Working Paper (Numbered Series) 86272 FEB 01, 2011
This issue includes the following : Ideas and innovation in East Asia, by Milan Brahmghatt and Albert Hu. Impact assessments in finance and private sector development : what have we learned and what should we learn?
... See More + , by David McKenzie. Scale economies and cities, by Indermit S. Gill and Chor-Ching Goh. Estimation of water demand in developing countries : an overview, by Celine Nauges and Dale Whittington. To mitigate or to adapt : is that the question? Observations on an appropriate response to the climate change challenge to development strategies, by Zmarak Shalizi and Franck Lecocq. Nuclear power and sustainable energy policy : promises and perils, by Ioannis N. Kessides.
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A better understanding of household water use in developing countries is necessary to manage and expand water systems more effectively. Several meta-analyzes have examined the determinants of household water demand in industrialized countries, but little effort has been made to synthesize the growing body of literature evaluating household water demand in developing countries.
... See More + This article reviews what is known and what is missing from that literature thus far. Analysis of demand for water in developing countries is complicated by abundant evidence that, contrary to what is observed in most developed countries, households in developing countries; have access to, and may use more than one of several types of, water sources. The authors describe the different modeling strategies that researchers have adopted to estimate water demand in developing countries and discuss issues related to data collection. The findings from the literature on the main determinants of water demand in these countries suggest that, despite heterogeneity in the places and time periods studied, most estimates of own-price elasticity of water from private connections are in the range from 20.3 to 20.6, close to what is usually reported for industrialized countries. The empirical findings on decisions relating to household water sources are much less robust and should be a high priority for future research.
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Economic and epidemiological data collected in Beira, Mozambique, are used to conduct this first social cost-benefit analysis for cholera vaccination in Sub-Saharan Africa.
... See More + The analysis compares the net economic benefits of three immunization strategies with and without user fees: school-based vaccination for school children only (age 5-14), school-based vaccination for all children (age 1-14), and a mass vaccination campaign for all people older than one year. All options assume the use of a low-cost new-generation oral cholera vaccine. The analysis incorporates the latest knowledge of vaccine effectiveness, including new evidence on the positive externality associated with the resulting herd protection (both protection of unvaccinated individuals and enhanced protection among vaccinated individuals arising from vaccination of a portion of the population). It also uses field data for incidence, benefits (private willingness to pay, public cost of illness), and costs (production, shipping, delivery, private travel costs). Taking herd protection into account has important economic implications. For a wide variety of parameters values, vaccination programs in Beira pass a cost-benefit test. Small school-based programs with and without user fees are very likely to provide net benefits. A mass vaccination campaign without user fees will result in the greatest reduction in the disease burden, but the social costs will likely outweigh the benefits, and such a program would require substantial public sector investment. As user fees increase, mass vaccination becomes much more attractive, and the reduction in disease burden remains above 70 percent at relatively low user fees.
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This issue includes the following: dollar a day revisited, by Martin Ravallion, Shaohua Chen, and Prem Sangraula; evidence on changes in aid allocation criteria, by Stijn Claessens, Danny Cassimon, and Bjorn Van Campenhout; does education affect HIV status?
... See More + Evidence from five African countries, by Damien de Walque; a cost-benefit analysis of cholera vaccination programs in Beira, Mozambique, by Marc Jeuland, Marcelino Lucas, John Clemens, and Dale Whittington; do exporters pay higher wages? Plant-level evidence from an export refund policy in Chile, by Ivan T. Kandilov; the determinants of funding to Ugandan nongovernmental organizations, by Marcel Fafchamps and Trudy Owens; and liquidity constraints and firms' linkages with multinationals, by Beata S. Javorcik and Mariana Spatareanu.
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Cooperative management, and development of Africa's international rivers holds real promise for greater sustainability, and productivity of the continent's increasingly scarce water resources, and fragile environment.
... See More + Moreover, the potential benefits of cooperative water resources management, can serve as catalysts for broader regional cooperation, economic integration, and development - and even conflict prevention. But riparians will pursue joint action only when they expect to receive greater benefits through cooperation than through unilateral action. Economic analysis can be used to make the case for cooperation on international rivers, using tools that will help identify, and measure the potential incremental benefits of cooperation, determine the distribution of benefits among riparians, and assess the feasibility, and fairness of alternative management, and investment scenarios. Where such schemes yield benefit distributions, not perceived as equitable among riparians, economic tools could also be used to calculate, design, and implement arrangements for redistribution. In all of these ways, economics can play an important role in enabling the management of international rivers, helping to motivate, design, and implement cooperative water resources management.
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Publication 25396 JAN 31, 2003
Sadoff, Claudia W.; Whittington, Dale; Grey, David
The authors use the World Bank's Living Standards Measurement Study (LSMS) surveys from 15 countries (covering more than 55,500 households) to examine the relationship between infrastructure coverage and household income.
... See More + The results show that throughout the world all income groups have much higher levels of coverage for electricity than for other formal infrastructure services (in-house piped water service, sewerage service, and private telephone service). In many countries most households in urban areas now have electricity service. As monthly household incomes increase from $100 to $250, coverage of all these infrastructure services rises, but at different rates. The findings confirm that the very poor rarely have these infrastructure services - with exceptions. The very poor often do have electricity if they live in urban areas. The very poor in Eastern Europe and Central Asia have much higher levels of coverage than those elsewhere in the world; they often have electricity, water, sewer, and telephone services. The results also suggest that if the poor gain access to services in their communities, many will decide to connect.
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Policy Research Working Paper WPS2551 FEB 28, 2001
The authors measure the monetary value households place on preventing malaria in Tembien, Tigray Region, Ethiopia. They estimate a household demand function for a hypothetical malaria vaccine and compute the value of preventing malaria as the household's maximum willingness to pay to provide vaccines for all family members.
... See More + They contrast willingness to pay with the traditional costs of illness (medical costs and time lost because of malaria). Their results indicate that the value of preventing malaria with vaccines is about US$36 a household a year, or about 15 percent of imputed annual household income. This is, on average, about two or three times the expected household cost of illness. Despite the great benefits from preventing malaria, the fact that vaccine demand is price inelastic suggests that it will be difficult to achieve significant market penetration unless the vaccine is subsidized. The authors obtain similar results for insecticide-treated bed nets. Their estimates of household demand functions for bed nets suggest that at a price that might permit cost recovery (US$6 a bed net), only a third of the population of a 200-person village would sleep under bed nets.
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Policy Research Working Paper WPS2273 JAN 31, 2000
Through a survey the authors study willingness to pay for improvements in air quality in Sofia, Bulgaria. Using a stochastic payment car approach - asking respondents the likelihood that they would agree to pay a series of prices - they estimate the distribution of willingness to pay various prices.
... See More + They find that people in Sofia are willing to pay up to about 4.2 percent of their income for a program to improve air quality. The income elasticity of willingness to pay for air quality improvements is about 27 percent. For comparison, they also used the referendum contingent valuation approach. Results from that approach yielded a higher estimate of willingness to pay.
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Policy Research Working Paper WPS2280 JAN 31, 2000
This report, Urban sewer planning in developing countries and the neighborhood deal : a case study of Semarang, Indonesia, includes a feasibility study which was conducted to test a contingent valuation methodology for assessing consumer demand for sewer services.
... See More + Investment in sewerage is generally considered to be expensive. However, global experience suggests that a demand-focused, process-oriented approach that attempts to address the needs of all stakeholders can lead to significant cost savings and a balanced sharing of financial responsibility for both capital investment and operation and maintenance. In this case study, households and neighborhood groups were offered different theoretical pricing arrangements for house connections and feeder sewer networks, and the results analyzed to determine the deal preferred by each of the three sub-districts included in the study. While not a comprehensive assessment of willingness to pay for sanitation systems and services in Semarang, the data do provide some interesting and useful insights into consumer priorities for public and private investment in sanitation infrastructure. Although sanitation presents a more complicated mix of public and private responsibilities for households and communities than does drinking water supply, the study demonstrates that contingent valuation can be an effective approach for assessing demand for sanitation services.
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This report describes the results of a large contingent valuation survey conducted in Kumasi, Ghana, to estimate households' willingness to pay for two types of improved sanitation services: Kumasi ventilated improved put latrines (KVIPs) and water closets connected to a sewer system.
... See More + The report describes several tests that were conducted to check the reliability of respondents' answers to the willingness-to-pay questions. The findings indicate that contingent valuation surveys can be successfully carried out in cities in developing countries for public services such as sanitation and that reasonably reliable information can be obtained on household demand for different sanitation technologies. The results of the study confirm that conventional sewerage is not affordable to the vast majority of households without massive government subsidies. On the other hand, it appears that only modest subsidies are required to achieve relatively high levels of coverage with KVIPs. This is because KVIPs are much cheaper than conventional sewerage and because most households are willing to pay about as much for a KVIP latrine as for a water closet connected to a sewer.
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The World Bank has been placing increasing emphasis on rural areas in its lending in the water sector. Considering all World Bank expenditures on water supply, the proportion of funds allocated to rural projects has increased from an average of 8 percent between 1974 and 1980 to an average of 14 percent from 1981 to 1985.
... See More + However, a Bank review of projects in this sector concluded that overall performance was disappointing. The review suggested that technology per se did not appear to be a major problem. It was concluded that the design of rural water supply projects had been overly supply oriented and that crucial demand aspects had been neglected. In particular, it recommended an emphasis on understanding: (a) what people want; and (b) what they are willing to pay for. A research study was approved to find ways to improve the financial and economic performance of water sector projects by developing improved information on households' willingness to pay for upgraded services in rural areas. This document reports on the results obtained from this field study. The objectives of the study were to determine the following: (1) the willingness of households to pay for improved service levels; (2) the determinants of the willingness to pay for improved service levels; (3) the preferences of households regarding the management of water delivery systems; and (4) the appropriateness of the existing government policy on the provision of water in rural areas.
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Working Paper 11397 JAN 01, 1992
Altaf, Mir Anjum; Jamal, Haroon; Whittington,DaleDisclosed
This paper presents a framework for the analysis of rent seeking in water supply and case study of water vending in a large metropolitan area in a developing country such as in Jakarta, Indonesia.
... See More + The analysis here suggests that deregulation of water sales coupled with the easing of supply constraints could substantially lower both hauling costs and the price of water and could reduce the ability of the water utility staff and neighborhood officials to capture economic rents. Effective public policy and donor involvement in the water sector must be based on an understanding of the structure of water markets and the political power supporting institutional arrangements. Finally, to ignore the political aspects of technical proposals when projects are being designed and evaluated is simply to invite failure.
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What economic and political factors have made cost recovery for rural water systems so difficult in the Nsuuka district of Anambra State? This paper found that households in the region do not want to pay for water in advance or commit themselves to a fixed monthly payment for water.
... See More + They want the freedom to buy water only when they use it - partly because they do not want to buy water in the rainy season and partly because they want control of their cash flow in the event of more pressing needs. Equally important, they do not trust the government to provide a reliable public water supply. If required to pay a fixed fee every month, households are willing to pay only relatively small amounts for improved services. Current arrangements for cost recovery - fixed monthly fees for both public taps and unmetered private connections - are inappropriate. Kiosk systems or kiosk systems with metered private connections for some households are the most promising way to improve cost recovery and meet consumers's cash flow needs. Kiosk systems can provide less expensive, more reliable, and better quality water than water vendors do. It is not yet possible to generalize these results to other parts of Nigeria or other developing countries, but the advantages are likely to be equally valid in many other places.
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Policy Research Working Paper WPS369 MAR 31, 1990
Whittington, Dale; Okorafor, Apia; Okore, Augustine; McPhail, Alexander
This report is based on a transcript of audio tapes produced when the authors traveled on a United States Agency for International Development (USAID) mission to the capital city of a Latin American country.
... See More + The purpose of the mission was to initiate a study of household water demand in the low-income squatter settlements surrounding the city. The authors selected a large squatter settlement and set about interviewing the community leader about the planning and organization that had led to the establishment of the settlement.
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This paper presents two procedures for estimating the value that households assign to the time they spend collecting water. Both approaches are used to derive estimates of the value of time spent collecting water for a sample of households.
... See More + Each of the 69 households in the sample faced a choice between three water sources : a kiosk which sells water by the bucket, vendors who deliver water to the home, and an open well. The price of a bucket of water from a vendor was about 10 times the price of a bucket purchased from a kiosk. There was no charge for water obtained from an open well. The first approach described for estimating the value of time assumes that a household's water source choice decision is based on two factors : the price of water at the source and the time spent collecting water from the source. The second approach is based on a multivariate analysis of the determinants of households' water source choice decisions. The results of both of these approaches yield surprisingly high values relative to the wage rate for unskilled labor. The results suggest that households in this sample consider the time spent collecting water as a significant economic cost. One of the most important policy implications of these findings is that the value of time savings from improved water supplies may be much higher than previously believed. Piped water distribution systems may thus be an economically attractive technology in many villages in developing countries.
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