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Kariuki and Schwartz 2005.
Uploaded on Thursday 16 Feb 2012
Public services provide cheaper water
By bringing water to people water resellers extend the coverage of piped water and provide a service with important benefits for households - but at a price. That price rises with distance from the utility, as defined by the number of intermediaries between the network and the end consumer.
Having a regular supply of clean water piped into the household is the optimal type of provision for human development. Experience suggests that households with water delivered through one tap on a plot (or within 100 metres) typically use about 50 litres of water a day, rising to 100 litres or more for households with multiple taps.
Household connections to a utility offer financial benefits. In unit price terms, utility water is by far the lowest cost option. Because of economies of scale once the network is in place, the marginal cost of delivering each additional unit of water falls sharply. Subsidies are another important price-reducing mechanism: utilities are usually the gatekeeper for a wide range of direct and indirect subsidies that keep the price of water well below cost.
Every step removed from the household tap adds to the price. Water vendors often act as a link between unconnected households and the utility. In some cases water is purchased from the utility and sold on to households, as in the case of private standpipe operators. In other cases water is purchased from the utility and sold to intermediaries, who in turn sell to households.
As water passes through the marketing chain, prices increase. Water delivered through vendors and carters is often 10–20 times more costly than water provided through a utility. In Barranquilla, Colombia, the average price of water is $0.55 per m 3 from the utility and $5.50 per m 3 from truckers. Similarly, in the slums of Accra and Nairobi people buying water from vendors typically spend eight times as much per litre as households with piped water supplied by utilities. (UNDP Human Development Report 2006)