Urban water supply: potential of pro-poor water connection subsidies in Cambodia

Published on: 03/03/2009

A new journal article uses household data from a range of Cambodian urban settings to assess the demand for water and identify the main factors determining household access to network water. [O]utside the capital {Phnom Penh] the urban [water] coverage rate is only 15 percent. Many people obtain their water from rivers, streams, tanks, wells or private vendors [who charge] prices that are usually about ten times higher than the official rate. An examination of 200 household variables and price data reveals that:

• Educational attainment levels are higher among connected households compared to non-connected ones.
• Members of an ethnic (mainly Chinese) minority are more likely to be connected compared to the majority Khmer group.
• Connected households have significantly greater assets than non-connected ones: a household with a telephone is 33 percent more likely to be connected than a household without a telephone.
• A one percent increase in the water connection fee reduces the probability of a household getting connected by about two-fifths.

The researchers advise policymakers - in Cambodia and other developing countries - to use targeted subsidies to encourage more poor households to connect. Once they are connected even the less well-off households may be able to afford a non-subsidised tariff. This advice is based on growing evidence that with targeted connection subsidies, the probability of excluding a deserving household is significantly smaller than with a general consumption subsidy. Poorer households are often willing to pay more for water and sanitation services than what they cost to operate and maintain. The [article urges] the Cambodian authorities to:

• better manage existing resources aimed at the provision of safe water targeted at the poorest, which could then provide the financial resources for a connection subsidy programme
• discuss with donors and concession operators how to finance a connection subsidy programme
• in addition to connection subsidies, consider other factors to improve service access and provision, such as developing sound regulations for the sector
• give an autonomous regulator a clear remit to promote accountability, transparency and competition between the public and private sectors
• undertake research comparing the efficiency of the private and public sectors
• generate data regarding the welfare effects associated with connection to and use of a water system.

Full reference: Basani, M., Isham, J. and Reilly, B. (2008), The determinants of water connection and water consumption : empirical evidence from a Cambodian household survey. World development ; vol. 36, no. 5 ; pp. 953-96.

Source: id21, 01 March 2009