Sidrat Asim

Pakistan Urban Forum

Willingness to Pay Study for Improved Water Supply

Services in Karachi

Problem Identification Clean drinking water remains the greatest

perceived need of the people of Karachi Only 4 hours of continuous water supply Flat Rate Tariff based on floor areas results in

high consumption Low Tariff does not cover Operation and

Maintenance Cost Public forced to buy water from private water

tankers Bottled water usage for drinking purpose is

high

Water Tariff

Source: KWSB

Water Supply Summary in South Asia

Source: Water in Asian Cities, ADB report

Objectives examines the current water usage habits of

the people in the city using the Averting Expenditure Approach

Theoretical Framework

ValuationStated

Preference

Contingent

Valuation Method

Conjoint Analysis

Revealed Preference

Averting Expenditu

re Approach

Travel Cost

Method

Hedonic Pricing Method

Cost of Illness

Methods

Averting Expenditure Approach Strengths:

based on observed behaviors and market data relatively simple to do

Weaknesses: underestimation of the true WTP

Averting Behavior

Water Tankers

Bottled Water

Suction Pumps

Boring Wells

Water Purification

Description of the Study Site

Karachi

Water Supply 354573 residential water connections in

Karachi 58% households connected Water demand estimated at 1080 million

gallons daily (MGD) Water Supply is limited to 650 MGD K-IV Project may augment water supply to

1300 MGD in 5 years Water Tanker mafia siphons off over 40%

water supply

Gulshan-e- Iqbal One of eighteen

towns in Karachi Main residential area

of the city Population of over a

million people Educational hub of

the city with a concentration of higher education institutions within its vicinity

Methodology

Primary Survey

Survey Site

Survey

• Face to face interviews

• Representative of all income groups and ethnicities in Karachi

• Conducted on public holidays in last week of December 2012

• 718 households visited by eleven surveyors

Population: Connected Households

Sample: 400 households

Results

Descriptive Statistics

Importance of Water

• 37% of the respondents rated water as the most important public utility

1 2 3 4 5 60%

5%

10%

15%

20%

25%

30%

35%

40%37%

33%

18%

9%

2%0%

Ranking of Water

Ratings of various public goods

Water ranks second most important public utility after health

Health Water School Power Road Telephone0

1

2

3

4

5

6R

ati

ng

Income and Expenses

• Households spend the least amount on piped water

Income

Less than Rs. 10,000

1%

Rs. 10,000-20,0007%

Rs. 20,000 - 50,00037%

Rs. 50,000 - 100,00032%

Greater than PKR 100,00023%

Source of Water used for Washing

• 99% use piped water as primary source of water for washing

• 56% use boring wells as a secondary source for water

• 28% use water tankers as a secondary source for waterPrimary Washing

SourcesSeconadary Washing

Sources

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0.990220048899756

0.00733496332518337

0.56140350877193

0.280701754385965

1.75%

Piped Water Water Tankers Public TapBoring Well Other

Source of Water used for Drinking

• 60% people use piped water as a primary source

• 22% use mineral water a

• 4% use water from water tankers.

• 36% use mineral water as a secondary source of drinking water

Primary Drinking Sources

Secondary Drinking Sources

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

60.64%47.89%

22.49%

36.62%

7.04%

Piped Water Water Tankers Mineral Water

Public Tap Boring Well Other

Current Water Satisfaction• Surveyed

households receive an average of 27 hours of water supply in a week

• Users were only moderately satisfied with current water supply

Overa

ll Su

pply

Hours

of S

uppl

y

Volu

me

of S

uppl

y

Qualit

y of

Wat

er

Relia

bilit

y of

Sup

ply

0

1

2

3

4

5

2.63 2.62 2.70 2.60 2.48

Rati

ng

Coping Behavior• 80% of the

households run motors

• 10% have a well installed

• electric motors run for 3 hours/day

• Onetime cost of having a well installed was Rs. 45800 on average

• 23% use water tankers

• 50% drink mineral water File: () 30 Dec 2013

Venn Diagram

N = 409

Motor

Well

(80 %)

(11 %)

(50 %) (23 %) Mineral Water

Tanker

27 (7 %)

20 5 %

133 33 %

21 5 %

5 1 %

16 4 %

97 24 %

1 0 %

1 0 %

28 7 %

14

3 %

2

0 %

9 %

38

6 1 %

% of total

Coping Cost

Tankers Mineral Water0

500

1000

1500

2000

2500

3000

3500

4000

3589

2981

(Rs./

mon

th)

Coping costs by Income

• Coping costs are higher for higher income households

Less

than

PKR

10,

000 

 

PKR 1

0,00

0 - 2

0,00

0  

PKR 2

0,00

0 - 5

0,00

0  

PKR 5

0,00

0 - 1

00,0

00

Great

er th

an P

KR 1

00,0

000

1000

2000

3000

4000

5000

6000R

s./

mon

th

Water Purification Methods

60% of the households use some form of water purification method

Water Purification by Source

• Piped water users need to use water purification methods more than those who use other sources of water for drinking

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

83%

30%18% 25%

33%

17%

70%82% 75%

67%

Purify Don't Purify

Empirical Results

• Household Income and Household size affect Coping costs positively.

  (1) (2)

LABELS Coping Cost

Water Purification

     

Income Class 885.0*** -0.266***

  (3.257) (-3.784)

Household Size 121.6**  

  (2.184)  

     

     

Constant -409.3 1.235***

    (4.579)

     

Observations 189 390

R-squared 0.102  

Discussion

Limitations

Study only focuses on the demand side

Study does not deal with the institutional weakness of the KWSB or issues of bill collection and financial management

Study is restricted to Blocks 4 and 7 of Gulshan-e-Iqbal town in Karachi

Thank you