Ethiopian Journal of Environmental Studies & Management 7(2): 160 – 170, 2014. ISSN:1998-0507 doi: http://dx.doi.org/10.4314/ejesm.v7i2.7 Submitted: November 22, 2013 Accepted: March 4, 2014

URBAN INFRASTRUCTURE CONDITION AND NEIGHBOURHOOD SUSTAINABILITY: A CONTINGENT VALUATION APPROACH

OTEGBULU, A.C. Department of Estate Management, University of Email: [email protected]

Abstract The aim of this paper is to demonstrate the implication of infrastructure condition to urban neighbourhood sustainability and how a demand driven approach can enhance willingness to pay for service improvement. The study is a survey research carried out through the distribution of structured questionnaires to 1040 households in 8 metropolitan local government areas namely; , , Eti-osa, , Shomolu, Mushin, and . The questionnaire was designed to elicit information on households’ preferences and demand for urban infrastructure including willingness to pay and averting expenditure. Findings from the study indicated that different areas of the city have preferences for different infrastructure both in specific types and service option, and that demand driven provision will enhance WTP and has implication to neighbourhood sustainability. It will also encourage cost recovery and public sector participation in infrastructure provision.

Key words : Demand side management, infrastructure, sustainability, urban neighbourhood, willingness to pay.

Introduction preferences in their policy and decision- The World Bank in a review of its lending making. Deciding on the infrastructure budget in the infrastructure sector called for a new actually involves choosing a set of focus on the flow of services, as well as on individual projects from the range of options demand of preferences of users and their that cover all infrastructure types. These willingness to pay for services provided. The multi-sectoral decisions are complex both report calls for greater use of the private because of information requirement and sector and encourages community because responsibility may be spread across participation in project design. It also noted several ministries and several levels of that many infrastructure services do not have government. Infrastructure provision could good sustainability over the long term. There is be viewed from both the supply (top - need to focus more on end user preferences bottom) and demand side (bottom - top) or a and to give attention to the quality of services combination of both. From the supply side, being delivered. Stressing the need to respond the focus is on how infrastructure influences to customers implies an enormous the economy. Better water, sewer, roads, and psychological shift in the command approach other services are expected to expand overall manner infrastructure is delivered in the past economic potential by allowing firms to be (World bank 2006; Andres et al., 2008; more productive. On the other hand, Mobogunje, 1993). infrastructure provision may be prompted to Infrastructure acts as the spinal cord that meet demand for services. links people, social institutions, socio- Willingness to pay (WTP) for services will economic activities, and natural environment be much greater and resources will then be into a coherent urban relationship. It is the key used in ways that lead to increased satisfaction component for providing an enabling if infrastructure is built where there is environment for sustainable growth. It is sufficient demand for the services (subject to equally essential for safeguarding health, affordability). Demand must be measured so protecting the environment, and promoting the that sufficient capacity is installed to allow for efficient operation of human settlements future expansion arising from reasonable (Andreas et al ., 2008, Goodman and Hastak, growth in demand. It is also influenced by 2006; Arrosi, 1996). Providers of public household’s income, the price of the service infrastructure must consider user need and provided, number of service hours among 160

Urban Infrastructure Condition and Neighbourhood Sustainability...... OTEGBULU, A.C. others. (Mycoo, 2005; Choynowski, 2002; between averting cost and WTP taking into Otegbulu, 2011; Fox, 1995; Kessides, 2001). consideration market size, capital and Public preferences for these services must recurrent costs and level of demand. He be reflected either through communal further suggests that the averting cost could be organizations, such as neighbourhood an indication of the maximum cost that could associations, or through a formal be allowed by the budget and income of the governance process such as elective consumer. representation or survey using questionnaire Infrastructure provision in and carried out in a democratic manner. other third world countries are characterized Infrastructure provision has remained a by command or top-bottom approach. The need major problem in developing countries like to place users/stakeholders at the Centre of Nigeria due to poor financing by government decision making will lead to the provision of and inadequate incentive to attract private services that are in tandem with people’s participation. Housing and infrastructure demand. This will enhance their willingness provision are costly and the inability of to pay for the services provided and provide a government to satisfy the demand of citizens good incentive for cost recovery, and has led to the proliferation of slums and service/neighbourhood sustainability. informal squatter settlements. The physical Urban households rely heavily on urban characteristics of these settlements bear infrastructure. Infrastructure services such as testament to the lack of physical clean water, transport, and communications are infrastructure: water logged muddy ground important consumption benefits, and their due to poor drainage, ill-defined access way and availability is a measure of basic welfare of the unpaved roads and long queues to obtain water population, as they have direct impact on their from single public tap or expensive water life style. Besides their direct value as an item vendors. The poor conditions of infrastructure in the “consumption basket “of households, have obvious implications for the health and infrastructure services are a means to economic condition of urban residents. This acquiring other goods and services. The direct could result in less money for food and and indirect consumption benefits from consequently lower nutritional status, which electric power, for example, includes the itself increases vulnerability to disease. It is extra hours of study time due to electric interesting to observe that the inhabitants of lighting, the availability of new forms of improved informal settlements have entertainment (e.g. cinema, television) and demonstrated the ability to improve their access to labour saving appliances. In addition, environment through ingenuity and the price of infrastructure services relative to improvisation in situations where other items affect the level of overall government has been unable to provide consumption which households can achieve infrastructure (UN-HABITAT 2008). This within a given budget constraint . (Kessides, situation has obvious implication to 1995; Samulson and Nordhaus, 2005; environmental, social and economic Calderon and Server, 2008). The constraints sustainability. referred to are cash income and time. (Kessides, There is always a link between 1995 and 2004) demand/supply, WTP and sustainability as The value to any household of any households/users are the major clients for infrastructure can be inferred quantitatively, at infrastructure and its provision must be in least in part, from the analysis of three types of response to households’ effective demand. behaviours: willingness to pay, allocation of The implication of this is that demand expenditure and allocation of time. preferences coupled with averting expenditure As an example of the first, a study of the and WTP will help in the planning of informal sector water vending in Onitsha, sustained infrastructure provision and tariff Nigeria reveals that the vast majority of regime. According to Gunatilake 2006, basic households were not serviced by the economic principle suggests that monthly municipal public water distribution system, charges should be equal to or less than WTP. and instead were purchasing water from This is based on the argument that tarrif private vendors at price that were 20 times charges above WTP will lead to welfare losses higher than those of the public utility (Kessides, and may discourage households from 1995 and 2004). connecting to services. However, Otegbulu According to Montes De Oca and (2011) opined that tariff should be adopted Bateman (2006) many urban areas in 161

Ethiopian Journal of Environmental Studies and Management Vol. 7 no.2 2014 developing countries face severe and long Conventional practices of network time challenges regarding the sustainability management-facilitating infrastructure supply, of their water supplies and other (FIS) has a powerful tendency to predict and infrastructure. provide service options with forecasts of The new focus on “customers” shows that increasing demand met in advance through agencies are realizing that user preferences and supply-oriented options. In contrast, Demand – satisfaction of those who receive the services Side Management (DSM) approaches attempt are more reliable indicators of project long- to avoid environmentally and economically term success than supply side, top-down expensive investment by managing both the indicators. Do the people served need or want level and timing of demand on Networks. the services enough to pay for them and to be Sustainability in infrastructure provision may involved in their upkeep? Is it the kind of not be possible without the prospect of cost service they need, and at the price they can recovery to be properly established. The afford? By responding to “effective demand,” sustainability of urban neighbourhood is which has its roots in community participatory directly linked to the sustainability of style of planning, infrastructure projects can infrastructure services in terms of economic, avoid the pit-fall of being constructed without growth, ecological balance and social progress. input from users who will be responsible for its If provision of urban services is to be upkeep and maintenance. With public finance substantial and sustainable, it must be stretching to the limit in many countries and profitable to its providers and affordable to its states, users’ willingness to pay for on -going users. This is the only way infrastructural services has become a crucial ingredient in conditions in our cities can be improved project design. sustainably. The World Bank now insists on cost recovery in place of subsidy. Infrastructure is Methodology more likely to be economically efficient, and The paper aims at showing how user to have favourable impacts on the demand preferences will enhance WTP with environment, when subjected to user charges. consideration to its sustainability implication. User charges are necessary to elicit effective The study will also determine the various demand and discourage wasteful consumption. service and specific options for infrastructure The absence of user charges has usually not and factors affecting infrastructure demand in promoted access to services by the poor, but the study area. rather reduced availability and worsened The study is a survey research based on the inequalities (Kessides, 1993). According to distribution of structured questionnaires to the World Bank (2006), a key lesson learned 1040 households in the study area comprising 8 from this experience is the importance of metropolitan local government areas of Lagos, paying close attention to the micro-level Nigeria (using stratified and systematic random institutional and operational arrangement for sampling techniques) out of which 774 (77.4%) demand-driven and, sustainable infrastructure responded. The areas include; Kosofe, Eti-osa, project at the local level. Alimosho, Ikeja, Mushin, Surulere, Apapa Sustainability issues are relevant at all and local government areas. levels from the individual to the organizations Questions were asked to elicit information (of a business or other nature) to on averting behaviour of households to municipalities, cities and regions. Small determine the cost of alternative source of changes in the direction of more sustainable infrastructure and expenses incurred due to society could be part of radical transformation poor state of infrastructure. Information was processes (Soderbaum, 2008). also obtained on preferences for both specific Inadequate financial rate of return, infrastructure and technical options (the however, undermines the sustainability of manner households prefer the infrastructure infrastructure projects, and in extreme cases provided) and households’ willingness to pay can produce “white elephants”. Reliable for them. Finally data was obtained on factors financial projections at the project approval influencing infrastructure demand and stage are essential to avoid this. The willingness to pay. Four types of infrastructure development of more sustainable cities are subject of this study namely; electricity, critically depends on the style of urban water, road and drainage. Drainage was not infrastructure provision that encourages more considered for service options as it was treated efficient patterns of resource consumption. as part of road in that context. 162

OTEGBULU, A.C. Urban Infrastructure Condition and Neighbourhood Sustainability ...... Analysis was carried out with the use of boreholes; in Ikeja local government (54%). both descriptive and inferential statistics. This situation exposes most households to water Relative impact index is used to analyze borne diseases with high cost implication households’ preference ranking. arising from loss of man-hours, and cost of treatment. The situation has sustainability implications. Results Figure 2 shows that majority of households Respondents’ Characteristics in the study area have electricity power supply All the respondents are residents of for between 1-5 hours a day; Kosofe (62.8%), Alimosho, Apapa, Eti- Osa, Ikeja, Shomolu, Shomolu (60%), Apapa (50%), Alimosho Mushin, Kosofe and Surulere Local (40%), Mushin (34%) and Surulere (32.3%). Government Area. Result from data obtained Some do not even have power supply for some shows that about 95 %ofthe respondents are days. In the absence of reliable electricity above twenty (20) years of age, which shows supply resort will be made to improvised that majority of the respondents are adults. electricity sources like generators, candles, The essence of securing information on the lanterns etc. some of the improvised sources are respondents’ qualifications was to be sure that not environmentally friendly and constitutes a they relatively understood what the survey threat to environmental sustainability. was about and to some extent, be able to Figure 3 below shows that more than 60% contribute to better infrastructure planning in of households in the study area use generators their locality. The survey result data also on a daily basis. Apapa and Alimosho have the shows that at least, 84.7% of the respondents highest percentage of 83.3% and 73.1% had higher education (from Ordinary/National respectively. The implication of this is the Diploma and above). increase in informal source of energy which is The questionnaire was targeted at heads or inferior and more expensive. In addition, it spouses of households. Their mean income is produces air and noise pollution, and increases between ₦1, 200,853 - ₦333, 833 per annum, global warming. This has obvious implication while household size is mainly between 1 and to environmental sustainability. 10. About 20% are above 10 in size. Findings From figure 4, a lot of problems emanate from the study shows that most of the from poor road conditions. The nature of road households have average education, while problems varies from local government to local majority have lived their respective lives in government. In Apapa and Ikeja local their respective neighbourhood for more than government, the greatest problem is narrow 7 years. This implies that they have good roads. In Alimosho and Shomolu, the major knowledge of the area which gives more problem is potholes. In Eti-osa, Kosofe and credibility to their response. Mushin lack of street light in the study area Figure 1 shows that most households rely creates insecurity at night. Potholes had been on wells water for domestic use Alimosho causing accidents and damages to cars, delay in (52.6%), Apapa (57%), Kosofe (50%) and traffic movement and robbery at hold-ups. Shomolu (66.7%). Most households use

Figure 1: Other Sources of Water Supply 163

Ethiopian Journal of Environmental Studies and Management Vol. 7 no.2 2014

Figure 2: Number of Hours of Electricity Supply per Day

Figure 3: Frequency of Use of Electricity Generator

Figure 4: Difficulties Arising From Poor Road Condition

Based on the result from figure 5 below, it takes from their homes until the flood clears up between 1 – 6 hours for flood to clear in most reasonably, it will lead to loss of man hours. The parts of the study area. The results shows that; situation impacts on both economic and Ikeja (66.7%), Surulere (52%), Mushin (50.6%), environmental sustainability of the study area. Kosofe (48.4%), Eti – Osa (37.5%), Alimosho According to Ogu (2000), the sustainability of (36%) and Apapa (33%). The implication of this urban neighbourhood is directly linked to the is that, most of those affected cannot move out sustainability of urban infrastructure services in 164

Urban Infrastructure Condition and Neighbourhood Sustainability...... OTEGBULU, A.C. terms of economic growth, ecological balance (34.8%), Shomolu (70%), Mushin (26.8%) and and social progress. Surulere (38.1%). The consequence of poor Data from figure 6 shows that most households drainage system is flooding and filthy in the study area have open drainage, and environment. The problem of flooding drainage filled with sludge. For example in associated with this situation affects both Alimosho local government they have; open environmental and economic sustainability as drainage (41.7%), Apapa (28.6%), Eti – Osa reported in Ogu (2000).

Figure 5: Flood Duration

Figure 6: Types of Drainage Systems

Table 1: Preferred Infrastructure in Different Local Government Areas

Data from table 1 shows that different drastic attention. The findings confirm the local government areas have different need to elicit household’s needs and preferences with respect to infrastructure preferences in Infrastructure provision and needs. For example, electricity ranked first planning. This confirms the view expressed by in all the local government areas except (Fox 1995, Otegbulu 2010, Andres et al ., Apapa where it ranked second and water 2008), that providing preferred infrastructure ranked first. This shows that electricity is a will enhance willingness to pay. major problem in the study area and needs 165

Ethiopian Journal of Environmental Studies and Management Vol. 7 no.2 2014 Table 2 shows the type of water connection preferences are as follows; for electricity respondents want in the neighborhood. Water prepaid method of billing ranked first while directly connected to the apartment was ranked Meter Reading Method ranked second in first; Common standing tap in the compound Alimosho, Apapa, Eti-Osa, Ikeja, Kosofe, was ranked second while Fetching from Shomolu, Mushin and Surulere Local public/street standing taps was ranked third. Government Areas. Also, on method of billing, the respondents

Table 2: Service Options

On the kind of road respondents prefer in determine their service option for all eight local government area surveyed: infrastructure. Demand orientation means that Roads with sidewalks were ranked first in all process in service provision respond to the Alimosho, Ikeja, Ketu, and Shomolu. Road consumer. A demand based approach therefore with traffic light ranked first in Eti-Osa, implies that the beneficiaries choose services Mushin, and Surulere while roads with from a menu of alternatives having price tags drainage were ranked first in Apapa. Road associated with them. The findings therefore with cyclist path was rank second in Ikeja, align with the views expressed in (Kessides Kosofe and Mainland. Road with drainage was 1997, 2004, World Bank 2006). Adhering to ranked second in Alimosho, Mushin and this will also enhance WTP, cost recovery Surulere while just motorable road was ranked service/neighborhood sustainability. According second in Eti-Osa. Road with cyclist path was to Fox (1995),Cotton and Franeys (1993) and ranked low by all respondents from Alimosho, World Bank 2006, Kessides 1995 and 2004 Apapa, Eti-Osa, Ikeja, Ketu, Shomolu, Mabogunje (1993) Choynoski (2002) and Mushin and Surulere Local Government Otegbulu (2011), users are the major clients for Area in this study. The peculiar infrastructure service and must be part of circumstances of each area will likely project design.

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Urban Infrastructure Condition and Neighbourhood Sustainability ...... OTEGBULU, A.C.

Table 3: Mean WTP and Expenditure

Results from this strengthens the need to is in line with the views expressed in literature consider service or technical option in by Gunatilake (2006) and Otegbulu (2011). infrastructure provision as the manner each High cost of running generators also affects area wants infrastructure to be provided household spendable income as it constitutes a depends on their peculiar circumstances; constraint on their budget. When pipe borne affordability and past experience. Households water service is non-functional or epileptic, resort to alternative sources of power in the households resort to informal sources. The absence of public electricity. The mean cost of table above shows the amount spent by running generators by households in the households on alternative water supply on various local government areas as shown in monthly basis. The highest expenditure is in table 9 is between ₦3000 and ₦5000 per week. Shomolu local government area with a mean This is an average of ₦500- ₦800 per day. The expenditure of ₦2,514.30 while Eti-Osa has the implication of this is that if electricity becomes least mean expenditure of ₦1,338.80. This regular, households would be willing to pay could also form a basis for setting water tariff any amount less than their averting expenditure in the study area when combined with WTP. they spend. The expenditure pattern and WTP Table 3 also shows cost incurred by car can be used in tariff setting for electricity. This owning households due to damages arising 167

Ethiopian Journal of Environmental Studies and Management Vol. 7 no.2 2014 from plying bad roads. Residents of Apapa condition in the study area in line with user local government incur the highest cost of demand preferences as this will enhance ₦15,300.00 per month while Ikeja local willingness to pay, cost recovery and government area has the least mean cost of sustainability. Poor infrastructure condition ₦8,506.00. The residents are also desirous of constraints neighbourhood sustainability, but improved roads and are willing to pay for it. residents incur a lot of averting expenditure Further to the above, poor drainage which is a good indication that they are willing condition leads to flooding which causes to pay for improved and sustainable damage to life and property. Table 9 below infrastructure provision in line with their shows that Apapa local government area incurs demand. the highest loss due to flooding as the value of property lost is ₦39,000.00 while the least cost References of ₦10,000.00 is incurred by Kosofe local Abdu, M.S. (1997). Urban Municipalities in government area. The table above also shows Nigeria: The missing link in Local the evidence of willingness to pay (WTP) for Governance and Development. Nigerian improvement of the various infrastructure. For Urban Forum , 1(3): 7 – 10 electricity Apapa has the highest WTP of Amis, P. and Kumar, S. (2000). Urban ₦2,535 per month while Mushin has the least Economics Growth Infrastructure and WTP of ₦1,697.00. For water Apapa has the Poverty in India: Lessons from highest WTP of ₦2,436 while Alimosho has visaulapatnam. Environment and the least WTP of ₦1,670.00. The highest WTP Urbanization , 12(1): 185-196. for road which is in sum of ₦13,750.00 is from Andres, L.A., Guasch, J.L., Haven, T. and Apapa local government area while the least Foster, V. (2008). The Impact Of Private WTP is from Ikeja local government area in the Sector Participation In Infrastructure; sum of ₦7,977.00. The highest WTP for Lights, Shadows And The Road Ahead drainage of ₦ 12,000.00 is from Apapa local Access, Affordability And Alternatives. government while the least WTP is ₦5,192.00 World Bank Washington D.C. is from Surulere local government. Arrosi, S. (1996). Health in metropolitan Households are willing to pay to avoid Buenos Aires. Environment and mitigation expenditure arising from poor Urbanization 8(2): 43 – 70 condition of infrastructure in the study area. Bagi, F.S. (2002). Economic Impact of Water There is no doubt that if infrastructure is sewer Facilities on Rural and Urban provided in line with user demand preferences, Communities. Rural America , Volume WTP will be high with obvious implication to 17(4): 44-49 economic sustainability of the services Barnejee, S.G., Morella. E. (2011). Africa’s provided Water and Sanitation Infrastructure: Access Affordable and Alternatives. Conclusion World Bank Washington D.C. The study indicates that urban households Brook, P. J. and Irvin, T.C (2003). spend much money on provision of Infrastructure for Poor People: Public infrastructures from informal sources. Service Policy for Private Provision. World Bank capacity can be greatly increased by making Washington D.C. existing investment to be more productive. Calderon, C. and Server, L. (2008). Whenever there is need to embark on new Infrastructure and Economic investments, the technology must be Development in Sub-saharan Africa. appropriately selected to meet households’ World Bank, Washington D.C. preferences and their ability to provide Choynowski, P. (2002). Measuring Willingness required maintenance. Planning has to be to Pay for Electricity.ERD. Technical designed through a system that must be able to Notes Series No. 3. Asian Development identify and meet demand of all users across Bank Manila. different income strata in urban areas. Good Cotton, A. and Franceys, R. (1993). planning must be responsive to the consumer. Infrastructure for the Urban Poor in This will necessitate movement to a demand Developing Countries. Paper 10307 orientation which represents a shift from the Journal of Urban Infrastructure in traditional focus on expanding capacity through Developing countries Sept 1993, pages command approach. There is an urgent need to 129 -138. address the deteriorating infrastructure 168

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