ANJUM Hymir Anjium Altaf, ;Haroon Jamal, -Md Dale Whittington.
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:COPY _ :11397 Type: LLINGNESS TO PAY FOR WATER I TAF, MIR ANJUM Dept.:ANJUM J byShYMir AnjiUmAltaf, ;HarOOnJamal, -md Dale Whittington. , U~~~~~~~~~~Ž ,-- ~N X -~~, (0 ca ID coQ -DU. | g os~~~~ 0 1992 The Interntonal Bank for Recostrwucdonand Developmenhe World Bank 1818 H Street, NW Washington,DC 20433 USA Cover photo: Mir Anjum Altaf Manufactwredin the United ates of Amedica MmeUNDP-Word Bank Water and SanitationPogrm was oaized as a joint endeavor of te United Nations DevelopmentP_gramme and the World Bank and bas been one of the primary playes in woddwide efforts to meet the challengeof providingbasic water supply and sanitationservices to those most in need in the developlnewodd. Pawem in this venture a the developingcountres themselves and the muldlakral and bitera agencies that fund the Progam's actvies. Me UNDP-WoddBank Wster and Sanition Progfam producesits own publicationsand also reeas woks nder the auspices of the Wotid Bank. lhe Prgas publicatos ane divided into two seris, a Water and Sanitation Prgram Repast seies and a Wat and Saniatn Dicsion Paper series. Ihe PogmamReport sedes pets formaldiscussions of the Program'sopeations and researchactivities as well as exminations of relevat projects and tds withi the water and saniaton setor. Program Reportsare subject to dgorous extenal review by independet authorties from apprprate fields. The Discussion Paper series is a less foml meas of communic timely and topical o De,vation, findings,and opinionsconcening Progam activitiesand sector issues. nhe docunoutha bas pnpd and pied by do UNDPWaddBank W S o Pg Waterand Sanitatoe Divhon, Iaftrauim aUd Uaa Dswlopmea puaumn, th WoWddBEL Copies maybe obined t Wser ad antda DM Mathe maybe quotd with pre atlubutlm s findelp, interpedon% and c_du,o expaed In tb papera tdWy toe of th anto and shoud n be atibuted any wa to he UNDP-WoddB Waer and San Prgm, the UnitedNatos D opa Progrmme, t Wodd ank or any afiad oMy mps tha ampany th. text havbeen piepa solely for theonvenienceof the medete designaton presetati of marl in themdo not Implythe ep on of anyopinionaoe n thepat of the UNDP-WoddBak Wat and Santtion Progm, the United ionsdDe roann the Wodd Bnk, or any alaed onlo Table of Contents Table of Contents .... ii A.clwledgnients .... via Exeutiw Summary.x 1. Introducion ........... 1 Objectives . .1...... Policy Ove.ew... I lstitutional Responsibilities. 2 Levels of Service and System Costs. 2 Tariffs ... 3 ut Plas ..................................... 4 2. Study Design Methodology, and SiteSelection ............................. , Study Depsi S..5 Methodology.. 5 Site Selection.. 6 SamplingWiJ Vg.es 7...7 General Description of the Study Areas .. 7 Sheikhmupra,Fasaabad and Rawalpid Ditrcs 8. .8 3. Analytical Overview .11 Principal Unes.of nquiry .. 11 A.ctalChoice Behavior ...................-.-.-.-.--. 11 HypotheticalChoice Behavior .. ............................11 Economic Viability of LInvestmentln Rual Water Supplies .. .......... 12 Description of Vadables Used in the Analysi ......... ........... 12 Explanationnd Rationale of ndependent Varabks ....... ......... 14 EstimationTechniques ............. 18 4. Sweet Water Zone: Overviewand Field Procedur. .21 Policy Issues .. 21 Water inthe Sweet Water Zone .. 21 Selecion of theStudy Viages .. 22 The Questic,aire and Bidding Games. 23 Conducting the Survey .. 25 5. Fmdings in the Sweet Water Zone: Analysis of Actual Choice Behavlir .27 Upgraing Service Levels. 27 Who Instas Electic Mbotoa?.. 27 Who CDnnectsto Piped WaterSystem? . 28 Electric Motor and HouseholdConnection as Alteatdve Choices. 29 Program Reo Series iiJ 6. Findings in the Sweet Water Zone: Analysis of Willingpess-to-PayBids ............ 31 HypotheticalChoice Behavior ............................... 31 Service Options Offered .................................. 31 Response of Householdsin Villages without an Operationa!Water System ........................................... 32 Responseof Householdsin Villages with an OperationalPiped Water System ........................................... 33 7. Estimated Revenues and Cost Recovery Potential .. ........................ 37 Provisionof a StandardPiped WaterSystem in Villages Familiarwith Such Systems ........ ........................ 37 Provision of a Standard Piped Water System in Vllages Unfamiliar with Su Systems ...................... 39 Provisionof an ImprovedSystem in Villages with an Existing Piped Water System ....................................... 40 Experimentswith Altemative Financing for Household Connections .... ... 41 & Bracldsh Water Zone: Overviewand Field Pcedures ......................... 43 Selection of Study Villages ................................ 44 Description of the Questionnaireand Bidding Games ................ 44 Conducting the Survey ............... ................ 45 9. imdings in the Braclsh Water Zone: Analysis of Actual Choice Behavior .... ....... 47 Who InstallsElectric Motors? .............................. 47 WhoCo nnus to Piped Water Systems? ........................ 48 Electric Motors and HouseholdConnectios ..................... 49 10. Fndings in the Brackish Water Zone: Analysis of Willingn, )-Pay Bids .... ...... 51 Wfillingnessto Pay for Connectionto a Stands._-_ystem .... ......... 51 Willingnessto Pay for Connectionto an Improved System .... ........ 52 Response of Households in Villages with and without Operational Piped Water Systems .................................. 53 Response of UnconnectedHouseholds in Type A Villages..... ........ 54 11. Estimated Revenues and Cost Recovery Potential .......... .......... 55.SS Costs of Piped Water Systems ................. .. ......... 55 Pwvision of a Standa Piped Water System ..................... 55 Provision of an mptoved Piped WaterSystem .... 5................55 Comparisonof Standard and ImprovedPiped Water Systems .... ....... 58 12. Arid Zon: Overvew and Field Procedures .............................. 61 Selection of Study Villages ................................ 62 Description of the Questionnaireand Bidding Games ................ 63 Conducting the Survey ................................... 64 13. Fmdings in the Arid Zone: Analysis of Willingoess-toW-PayBids ................. 65 ServiceOptions Evaluated ................................. 65 Response of Householdsin Vi-llges without Plans for Istaation of Public WaterSystems .................................. 65 iv UNDP-WorldBank Water and Saiation Ptogran Willingnessto Pay for Connectionto a Standard PHED System with House Connections .................................... 66 Wlingness to Pay for an ImprovedPiped Water System with House ConnCtios ................. 66 Multivarate Analysis of Willingwess-to-PayBids for Piped Water Systems............ 67 14. Esimated Revenues and Cost Recovery Potential ............ 71 Costs of Piped Water Systems ........... 71 Provision of a Standard Piped Water System ...... ...... 71 Provision of an Impoved Piped Water System ..... ........ 73 Provision of a Piped Water System Based on Public Taps .74 15. Concusions and Policy Suggesions .79 The Nature of Demand for Water in Rural Areas .79 Private Upgrnding af Service in Central Punjab .79 Ihe Ecnomics of VMage Water Supply Options .................. 81 The Arid Zone .82 Discussion.83 References.......... 87 Appenidi8es. AppendixA .. 91 A1 VillagePofiles ............................ ........... 91 A.2 Rage Pofiles ......... 92 A3 Profilesby Vilage and Household Type......... 93 A.4 Patem of Household Choice over Available Service Options and Approximate Private Costs ......... 94 A.5 Reasons Mentioned by Households for Obtaining a Domestic Connection to Piped Water System ......... 95 A.6 Reasons Mentioned by Households for not Obtning an Domestic Connection-Type A Village ......... 95 A.7 Relationshipbetween Economic Standing and Choice of Service Level-Type A Village ......... 96 A 8 Level of Satsfaction with Piped Water Supply System-Type A Village .... 97 A.9 Major Shortomings of Piped SupplySystem Mentioned by Households-Type A Vi-lage ............................................ 97 A.10 Most Important Improvement in Piped Supply System Desired by Households-Type AVillage ................................ 97 A1ll Household's Infonmation/BeliefsRegarding Characteristicsof Piped Water and Altendve SupplySystems .98 A12 Number of Years HouseholdsWould Keep HandpumpsOperational If a Piped Water Supply System Eisted in Their Viadge.99 A13 HouseholdPreference Regrding Responsibilityfor Operation and Management of Piped Water Supply Systems.99 ProgramReport Seria v Appedi B ... .................................................100 B.1 Decisionto Installan ElectricMotor. Results of a LogitM o ..........del 101 B.2 Decisionto Connectto a Piped Water Supply System:Results of a Logit M%odel .............................................. 102 B3 StatiscAnalysis of Willingnessto Pay for a StandardPiped Water Supply System:Resuts of Oibm Last Squas Regr-asionModel .... .......103 B.4 StatisticalAnalysis of Willingess t Pay for an ImprovedPiped Water Supply Systemby Householdsin Villageswith an ExistingPiped Water Supply System: Resultsof an Ordiny Lest SquaresReL,:ession Model .... .......... 104 Appendix C ...... 1...............l0S el Distributonof Wilingnss-to-wPayBids for a StandardPiped Water System in ViDageswithout an OperationdPiped WaterSupply ................. 105 C.2 Distributionof WTPBids for a StandardPiped Water Systemwith a Flexible Financing Arrangementin Villages without an OperationalPiped Water Supply .106 C3 Distibutionof