Elsevier

Water Policy

Volume 4, Issue 6, 2002, Pages 531-556
Water Policy

Household demand for improved piped water services: evidence from Kathmandu, Nepal

https://doi.org/10.1016/S1366-7017(02)00040-5Get rights and content

Abstract

We examine households’ demand for improved water services in Kathmandu, Nepal, where the government is considering the possibility of involving the private sector in the operation of municipal water supply services. We surveyed a randomly selected sample of 1500 households in the Kathmandu Valley and asked respondents questions in in-person interviews about how they would vote if given the choice between their existing water supply situation and an improved water service provided by a private operator. The results provide the first evidence from South Asia that households’ willingness to pay for improved water services is much higher than their current water bills. We find substantial public support among both poor and nonpoor households for a privatization plan that would improve water supply and require all participants to pay regular and higher monthly bills.

Introduction

In this paper we examine households’ demand for the improved water services to be provided by a private operator before a privatization deal is concluded Pattanayak et al. (2001). The Government of Nepal is considering the possibility of involving the private sector in the operation of municipal water supply services in the Kathmandu Valley. In March and April, 2001, we surveyed a randomly selected sample of 1500 households in the Kathmandu Valley and asked respondents questions in in-person interviews about how they would vote if given the choice between their existing water supply situation and an improved water service provided by a private operator. Respondents were told, however, that the improved services provided by the private operator would entail substantially higher water bills. By presenting different subsamples of randomly selected households different typical monthly water bills, we were able to estimate how support for the improved, privatized water services would decrease as the cost of the new services increased.

We also asked households with different existing water supply situations what they would do if the new private water service were installed and water tariffs were increased. For example, would currently unconnected households decide to connect if service improved and tariffs increased? How many currently connected households would disconnect from an improved water distribution system managed by a private operator if prices were raised a specified amount? Because we collected considerable information on the socioeconomic status of households in the sample, we can determine the preferences of both poor and nonpoor households for such changes in service levels. Our results show that there is strong support among both poor and nonpoor households for a plan that would result in improved water services and higher water tariffs. We estimate that approximately 70% of the population would be willing to pay a fivefold increase in the current average water bill for improved water services provided by a private operator.

This paper is organized as follows. In the Section 2 of the paper, we describe the existing municipal water supply situation in the Kathmandu Valley. Section 3 presents the research design, while Section 4 describes the fieldwork and sampling strategy. In Section 5, we present the findings of the research, and in Section 6 we offer some concluding remarks.

Section snippets

Background: the existing municipal water situation in the Kathmandu Valley

To better understand why sample respondents answered our questions the way they did, it is necessary to briefly describe the current condition of the municipal water supply distribution system in the Kathmandu Valley. The Nepal Water Supply Corporation (NWSC) supplies piped water services to the five main municipalities in the Kathmandu Valley–Kathmandu, Lalitpur (Patan), Bhaktapur, Kirtipur, and Madhyapur (Thimi). The total population in the NWSC's service area is approximately 1 million

Conceptual framework and study design

To explore household demand for water, a survey was designed to gauge households’ reactions to a possible plan to engage a private sector operator in order to improve several attributes of the service provided by the piped distribution system. Because households in the Kathmandu Valley are currently obtaining their water from a variety of different sources and have different housing arrangements, it did not make sense to ask all households in the sample precisely the same questions about

Sampling strategy

Households were selected using a multi-stage cluster sampling procedure. Clusters were located using aerial maps provided by the Central Bureau of Statistics for the 1996/97 World Bank Living Standard Measurement Survey for Kathmandu. In three of the five municipalities in the Kathmandu Valley (Kathmandu, Lalitpur, and Bhaktapur), we used a previously conducted complete enumeration of all households as our sample frame (SILT-DRTC, 1999). In Kirtipur and Madhayapur we used the 1991 population

Socioeconomic profile of respondents

Table 4 presents a socioeconomic profile of the sample respondents. The typical respondent in the sample was a 37-year old Newari male head of household. He had a spouse and four children less than 18 years of age living at home. He had 10 years of education and could read a newspaper easily. He owned his house, which was a single-family, multi-storey building that had at least four rooms, and he rented out one room. The floor, walls, and roof of his house were made of concrete. He had

What influences household responses? multivariate regression results

We conducted multivariate regression analysis of the CV data to further understand household preferences for improved water supply services. Theory and intuition suggest that preferences for improved water supply and WTP would differ across population groups with different sociodemographic characteristics, existing water situations, and opinions about water quality and public policy. Multivariate regression analyses were used to (1) test joint hypotheses based on the statistical significance of

Concluding remarks

The results of this survey provide the first evidence from South Asia that households’ willingness to pay for improved water services are much higher than their current water bills. Moreover, our results suggest that households in Kathmandu are positively disposed toward the involvement of the private sector in the effort to improve the quality and reliability of piped water services. We find substantive public support among both poor and nonpoor households for a privatization plan that would

Acknowledgements

We acknowledge financial support from the World Bank and the Water and Sanitation Program. The views expressed in the paper, however, do not reflect those of these organisations.

We would like to express our thanks to Clarissa Brocklehurst for her support and guidance during the planning and implementation of this study. Govind Subedi, Yogendra B. Gurung, Keshab P. Adhikari, Dhanendra V. Shakya, Laxman S. Kunwar, and Bal Krishna Mabuhang all helped with the design and supervision of the

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Detailed discussions of the materials presented in this paper are reported in Pattanayak et al. (2001).

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