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Renewal of water-related infrastructure and user\'s contribution: a few benchmarks

Epiphane Assouan, Tina Rambonilaza and Bénédicte Rulleau

Cahiers du GREThA from Groupe de Recherche en Economie Théorique et Appliquée(GREThA)

Abstract: This paper studies the contribution required from the users of collective drinking water networks to finance asset management of infrastructures. We characterize the first-best optimum and we compare it to the social optimum in the presence of preferences heterogeneity, in order to take into account the uses of alternative techniques for certain household needs. These alternatives uses generate negative externalities for the good functioning of the water networks. The first-best optimum thus requires a transfer from the exclusive users of the collective network to the users of the alternatives. Furthermore, Nash equilibrium reveals that the existence of this transfer requires other motivations than the only usage values. Finally, the case of water infrastructure asset management emphasizes how an essential part of inequality that can be associated with it can be attributed to preferences heterogeneity.

Keywords: water services; willigness to pay; pur public good; game theory (search for similar items in EconPapers)
JEL-codes: C72 H41 H54 Q25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm and nep-gth
Date: 2018
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Handle: RePEc:grt:wpegrt:2018-19