Pipes, Taps, and Vendors: An Integrated Water Management Approach

Georg Meran, Markus Siehlow () and Christian von Hirschhausen
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Markus Siehlow: Berlin University of Technology, Germany
Christian von Hirschhausen: Berlin University of Technology, Germany†DIW Berlin, Germany

Water Economics and Policy (WEP), 2021, vol. 07, issue 04, 1-29

Abstract: This paper applies a microeconomics-based stylized model to identify the optimal modal split of water supply infrastructure in regions of the Global South against the background of the Sustainable Development Goal (SDG) No. 6. Based on an assumed linear city, we calculate the optimal modal split of water supply. Not all water users need to be connected to a centralized, pipeline-based water supply network from an economic perspective. We calculate the optimal tap density and the optimal spatial range of households served by non-mobile or mobile water vendors for the area with unconnected households. The analysis is made for the case of water requirement (totally inelastic water demand), and afterward, the research will be extended to the case of an elastic water demand based on a Stone–Geary utility function to incorporate price and income effects. The result, an “optimal modal split†between network-based water supply and other supply options, has main implications on water tariffication. While the volumetric elements of the tariff are based on the marginal costs, the level of the access fee mainly depends on the subsistence level of water.

Date: 2021
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Working Paper: Pipes, Taps and Vendors: An Integrated Water Management Approach (2020)
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DOI: 10.1142/S2382624X21500181

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