Access and Affordability of Clean Water Supply for the Urban Poor

When asked whether it is more important for the urban poor to have ‘access’ or ‘affordability‘ for clean water supply, I believe the question has a built-in assumption that access and affordability is a trade-off, while it is not necessarily true. The urban poor can have cheap access to safe and clean water, provided that the cities they live in have the correct enabling institutional and regulatory framework to do so.

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By: Fika Fawzia

When asked whether it is more important for the urban poor to have ‘access’ or ‘affordability‘ for clean water supply, I believe the question has a built-in assumption that access and affordability is a trade-off, while it is not necessarily true. The urban poor can have cheap access to safe and clean water, provided that the cities they live in have the correct enabling institutional and regulatory framework to do so.

Access to clean water supply is the basic step in achieving a minimum standard of health and in undertaking economic activities, thus many argue that access to water is a human right. However, as water becomes increasingly scarce and valuable, it is argued that water should be priced by the market to correctly value this resource.

As a result, even though water is a human right, there are costs associated in delivering water and there is a need to pay because the price is used as a control measure to avoid overconsumption and underinvestment in enhancing the resource.

The problem of access and affordability for clean and safe water supply for the urban poor is like two sides of the same coin. In general, the poor who are not connected with network pipes don’t have access to the formal water supply and in turn, they look for other informal alternatives, such as water vendors or resellers (which are more expensive), or from ground water or nearby rivers (which are cheaper but pose serious risks for their health and safety).

The lack of connection for the poor is usually caused by the expensive connection costs or regulatory barriers for them to connect (i.e. they live in illegal land/slums). This is particularly the case in Jakarta, Indonesia, whereby of the 56% of the residents connected to the network (Jakarta Water Supply Regulatory Body, 2004), most of the unconnected are the poor (who live in both legal and illegal lands) and they use a combination of ground water, vended water and water from public hydrants instead. Vended water in Jakarta, costs 10-32 times more compared with the costs of networked water supply (ADB, 2003). The poor, who have few means to begin with, end up paying more for water.

In theory, if universal coverage is applied, the poor would be benefiting from affordable access to the networked water supply. However, achieving universal coverage is not as simple as it seems because service providers usually don’t have enough funds to start with in order to expand the network.

If you are the service provider, you are then faced with the dilemma of raising the price towards cost recovery levels, but by doing so, you are further excluding the poor because they don’t have the financial capacity to connect in the first place. In some occasions, if you are a private service provider, your prices are even regulated by the government which doesn’t give you the flexibility to adjust the price.

The popular policies for providing access to the poor are cross-subsidies and/or through Increasing Block Tariff (IBT) models for pricing. However, research shows that subsidies and IBTs can be wrongly targeted, as the benefits usually go to the middle-income groups more than the poor. When most of the poor are not connected, subsidies to lower the costs to connect to the pipes are then more effective than consumption subsidies.

Even if they are not connected, the poor are still potential consumers and service providers should actively engage them to assess their demands and willingness to pay for the type of water services that they need. Furthermore, the regulator must have the adequate monitoring capacity to ensure that universal coverage is the overarching principle so service providers can be innovative in servicing the poor.

When they are connected to the network pipes, the affordability issue for the poor can be adjusted through tariff and pricing policies. In between the waiting time for the poor to be connected, innovative measures to connect the poor with ‘good-enough’ water supply can be followed through.

Small Piped Water Networks (SPWN) in Manila, Tien Giang, and Ahmedabad City for example, are measures to connect the poor through demand-driven community-based arrangements that are both convenient and affordable. Customers don’t have to travel long distances to get water and they can pay in small amounts (daily or every few days) and pay connection fees by installment.

Through SPWNs, those who are lacking in land tenure can also still benefit through cooperation arrangements between community based organizations and the formal service providers who connects the main water line to the SPWNs. Public-private-community arrangements such as these are only feasible if the institutional and regulatory frameworks are in support of it.

If regulators ensure the principal of universal coverage and pro-poor institutional and regulatory frameworks are in place, choosing access or affordability would not be a problem because in the end, the urban poor can have the best of both worlds: cheap and convenient access to clean and safe water supply.

4 thoughts on “Access and Affordability of Clean Water Supply for the Urban Poor”

  1. Dear Fika,

    First off, we must see the urban poor as intertwined problems of development covering inequity, reckless and no-vision development. The existence urban poor is the consequence of the development failure, particularly the rural development. In my opinion, most of the urban poor comes from the rural areas without adequate skills and becomes squaters.

    The proposal to heed the urban poor’s need is very good, however I am afraid it encourages more urbanization and leads to increasing burden of environment and social affairs.

    The government’s focus should be aimed at developing rural area. We should contain urbanization by speeding up the rural economy.

    For the long term, instead of thinking the need of urban poor, the government should attract the urban poor to leave the city voluntarily to other center of growth. And it is the main job of the government: to develop those center of growth and give better education for its people.

    regards
    erwin

    1. Hi Erwin,

      I have no objection that the very existence of the urban poor is due to poor development planning, as the opportunity for jobs in the cities creates an irresistable shift from the rural to the urban areas. But if I were to discuss the policies for speeding up development in those rural areas, I would be talking about a whole wider topic, not just access to water for the urban poor.

      I am closely watching on the government’s plan for the Indonesian economic development corridors, as they aim to create these new center of growths – or hubs, the term that they use – which are located in existing cities anyway. I believe you have written about this in your blog. On this point we should come to realize that urbanization is unavoidable, you simply can’t contain people in the rural areas and tell them not to come to cities. And this is not unique in Indonesia as this trend is happening worldwide.

      Water infrastructure is one thing that I’m highlighting in this post. If you don’t have universal coverage as a principle and pro-poor regulation in place, as cities grow throughout Indonesia (not just Jakarta), the poor would be having difficulties in getting affordable access to clean water in the future.

      I’m also writing this post as today is World Water Day. The theme for this year is “Water for cities: responding to the urban challenge, aims to spotlight and encourage governments, organisations, communities, and individuals to actively engage in addressing the challenges of urban water management”.

  2. Hi Ms Fawzia,
    Universal coverage in drinking water supply is, of course, what everybody wants, including the regulators, moreover the government. In fact, not only in drinking water, but also in all basic infrastructure, including improved sanitation. The drinking water service providers – and I am talking about PDAM – are indeed facing dilemma. It is the dilemma between serving the urban poor, because they know it is not right to exclude them from the service, and getting a good income to grow, because like you said, the urban poor do not have the financial capacity both to connect and to pay the service, maybe even before the tariff is increased according to tariff recovery level. And that is only one of the problems the providers have, since PDAM which are categorized as “healthy”, that is in financial, management and technical aspects in 2010 does not even reach 30% of all PDAM throughout the country.
    Although the situation of drinking water provision in this country is far from what we all have been dreaming of, the government is really aimed at improving the situation. Starting with the approach; they have not only the approach for institutional-based service but also for community-based service, which is mostly targeted to increase the access coverage in rural areas. That is, to involve the community as the service user in the whole cycle of service provision; ie planning, implementing, operating, and maintaining the facility in order to achieve the sustainability of the facilities.
    As for the urban area, it is the institutional-based approach that is mostly suited. That is to strengthen the capacity of drinking water service providers. In the case of PDAM, as one of the providers, the purpose is to achieve “healthy” category mentioned previously. The logic is that to be able to increase the coverage, including to the urban poor who live in slum (which is the legal land; squatter is the term the government use for illegal land), PDAM should be “healthy”, first. After all, how well could you help others if you were not in a good condition yourself? For this reason, there are several activities done by the Ministry of Public Works (MPW) funded to improve the condition. Technical assistance for service provider is one of the activities. This nationally funded activity is not only for PDAM, but also for non-PDAMs service providers.
    Through coordination between ministries as well as planning to include the urban poor, Bappenas and MPW has recently rolled out a grant scheme for PDAM to extend their coverage for the urban poor. Firstly supported by AusAid, the scheme works by reimbursing every house connection for urban poor community after being proven to work for several months – so it is not anymore output-based, but it has shifted to a more outcome-based program. The success of the initial program has somehow been proved by the programs being successfully attracting USAID that later on agreed to pour its support into the program, later on.
    Supported by some donors, some PDAMs in Indonesia have also been involved in water operators partnership programs. It is the program that pairs two water utilities, one becoming the mentor for the other so that the mentee could improve their condition by learning from the mentor. For our PDAMs, the mentors varies from the water utilities from the neighboring countries such as the Philippines, Malaysia, and Australia. The result of the program can already be seen now, for example, PDAM Surabaya has been able to create master meter in one of its low income community located in the city or the reduction of level of non-revenue water. The scheme runs in a collaborative way between the water utilities, government and the community itself. Each party has its own role; PDAM provides the connection from the main city network, the community self-provides the house connection and operates the network fed by the master meter, and the government creates the enabling environment, including the assistance in preparing the community in terms of organizational and other capacity it needs to operate the system. The way I see it, the system might be put side by side to the SPWNs you mentioned.
    I do agree and we obviously need the universal coverage, but here we have to realize that there are many non-technical problems we need to solve. This condition is unsurprising as it is found in many developing nations around the globe. However, it is not something we can use as excuse, but rather as challenges that invite all of us to come together to do our best to solve them.

  3. My take is a little different. Not only is access vs. affordability a false dichotomy, but in the context of poor governance and a narrow tax base as in the case of Indonesia, those two parameters are not even the primary considerations in making water available to the poor, which in Indonesia is a good half of the population.

    Access or affordability: Ensuring the urban poor have adequate water supply

    In seeking to ensure adequate water supply services to the poor, activists and policy-makers alike have trivialized the complex nature of infrastructure services provision in low-income urban environments, and reduced policy options to a false dichotomy of promoting either access or affordability. The issue is made to turn on the assertion that one is meaningless in the absence of the other and vice-versa. The reality, however, is more complex than this binary choice. Access, the ability to reach a water tap either in one’s home or in a nearby public space, and affordability, the ability to pay for the fluid coming out of that tap, almost always impact on one another in complex and often unexpected ways that go beyond the zero-sum game suggested by the dichotomy.
    In addition, access/affordability is many times not the sole or even the primary choice which determines the ability to cater to the poor in a sustainable fashion. The regulatory framework and the technical capacity of institutions are just two examples of other elements than impinge crucially on this. This paper, therefore, argues that the access/affordability dichotomy is not only empirically flawed, but also incomplete in capturing the complexity of guaranteeing water supply to the poor sustainably. A more fruitful focus is access-through-affordability with an eye on the technical and regulatory environment.
    Affordability alone has been found wanting due to its propensity to lead to water supply systems that are financially unsustainable in the long-term, and therefore decreasingly effective over time, particularly in the face of rapid urbanization and population growth. The so-called “deregulation” of public utilities in the developed and then in the less developed countries in the 1980s and 1990s resulted in dissatisfaction as private sector provision resulted not infrequently in reduced affordability for the poor. Prioritizing affordability rests on the assumption that the poor cannot or are unwilling to pay or pay more water supply services. Studies suggest, however, that the poor already pay relatively high prices for water (e.g. from water vendors), and that their willingness to pay for water is influenced positively by the prospect that taps (private or public) will provide not only more convenient access, but also more reliable service and better quality fluid. Affordability has also been traditionally premised on the provision of consumption subsidies. The efficacy of subsidies is questionable due to the difficult task of accurately identifying the intended recipients and to the use of tariff structures which rhetorically are meant to help the poor but which in practice are beneficial largely to the middle-classes. Finally subsidies tend to be fiscally or politically unsustainable, and lead to distortions such as reselling and unsustainability in economically competitive environments.
    On the access side, the issues are largely financial and regulatory. Typically local governments in developing countries lack the funds to undertake the public works required to provide access either to public taps or private connections. Therefore they often turn to private sector concessionaires through overly rigid regulatory measures. In El Alto, Bolivia, for example, the government specified only one type of service in the concession contract, leaving the private service provider no latitude for supplying access at different rates depending on the availability to pay. This one-size-fits-all approach to regulation vitiates efforts at improving access. In Chile, the wealthy suburbs of Santiago serviced by a private concessionaire suffered shortages due to poor regulation requiring the water supply service firm to reinvest in developing new sources of water in order to keep up with increased demand. Access, that is, a connection is no assurance that water will continue to flow in the future, even for those who can afford it, as the case of Chile attests. In other places, poor regulation has led to concessionaires “skimming the cream off top” by focusing on providing access to those most able to pay or most cheaply connected, thereby leaving the intended recipients of such projects, the poor, without access.
    Instead, a more fruitful approach is to focus on access-through-affordability. One way to implement this is with subsidies not for consumption, but rather for connections (i.e. access). This is approach is particularly pertinent in supply-side water supply infrastructure projects in which significant barriers to affordability are often erected. The access-through-affordability approach inherently recognizes that the initial up-front costs of access are often the principal affordability barrier. Access and affordability are intertwined. It also incorporates the insight that affordability of access is likely to lead to a revolution in water provision by unleashing an exponential demand for connections.
    Finally, there are several other fundamental elements and policy decisions in ensuring adequate supply to the poor not captured in the affordability/access dichotomy. In other words, deciding on affordability or access (or access-through-affordability as this paper suggests) is not the sole or even the primary considerations in some countries. The full range of these considerations are beyond the scope of this paper, but in the least developed countries there may well be other considerations that dwarf or render moot in the short-term the affordability/access polemic. For example, in the case of Timor-Leste’s capital Dili an ABD report notes that limited human resources and deficient management practices as key problems in improving water supply in the city. Although government and ADB support has taken a pro-poor approach in addressing both access and affordability, these efforts remain somewhat ineffective in the face of poor institutions and human resources.
    Access or affordability is a false and an incomplete choice in ensuring water supply to the poor. A more fruitful approach is to focus on an access-through-affordability approach which inherently recognizes the interdependence between the two choices. Nevertheless, institutional, financial and regulatory aspects must be addressed in order to make the strategy viable and sustainable. As in virtually all areas of public policy, there is no silver bullet or panacea.

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