Condominial water and sewerage systems : costs of implementation of the model

This paper undertakes the economic and financial evaluation of the El Alto Pilot Project (EAPP), a pilot project aimed at transferring the condominial water and sewerage system from Brazil to Bolivia and testing its applicability in the context of private sector participation in service provision. Since its inception in 1998, the EAPP has provided condominial water connections to 1,977 households in eight neighborhoods of El Alto, and condominial sewerage connections to 4,050 households in nine neighborhoods of El Alto. The pilot project experimented with a number of different components including: innovative engineering design of networks; community participation in network construction and maintenance; hygiene education to support the installation of household facilities; and micro-credit lines to finance the construction of bathrooms. Compared to conventional water and sewerage systems the following conclusions were drawn. The engineering design component alone produced significant savings of 24% for sewerage and 40% for water. The community participation component further increased the savings available for the sewerage service to 40%, but did not have any net effect on the cost reductions available for the water service. The hygiene education component had a very substantial effect on household behavior, but the size of the benefits was more modest than might be expected owing to very abstemious water consumption practices peculiar to El Alto. Evidence on the micro-credit facility suggests that it probably was not all that effective in reaching the poorest households. From the utility's perspective, it was difficult to make categorical statements about the profitability of making condominial as opposed to conventional connections. There does not appear, however, to be any incentive for the utility to engage in hygiene education since the additional costs are not recouped through the connection charge, and the resulting increases in water consumption although significant are not large enough to take consumers out of the loss-making low volume tariff band. From the consumer perspective there were considerable savings in connections charges, especially for sewerage.