The Welfare Costs of Unreliable Water Service

Brian Baisa (), Lucas Davis, Stephen W. Salant and William Wilcox

MPRA Paper from University Library of Munich, Germany

Abstract: Throughout the developing world, many water distribution systems are unreliable. As a result, it becomes necessary for each household to store its own water as a hedge against this uncertainty. Since arrivals of water are not synchronized across households, serious distributional inefficiencies arise. We develop a model describing the optimal intertemporal depletion of each household’s private water storage when it is uncertain when water will next arrive to replenish supplies. The model is calibrated using survey data from Mexico City, a city where many households store water in sealed rooftop tanks known as tinacos. The calibrated model is used to evaluate the potential welfare gains that would occur if alternative modes of water provision were implemented. We estimate that most of the potential distributional inefficiencies can be eliminated simply by making the frequency of deliveries the same across households which now face haphazard deliveries. This would require neither costly investments in infrastructure nor price increases.

Keywords: Water Supply Uncertainty; Water Storage; Distributional Inefficiency (search for similar items in EconPapers)
JEL-codes: O12 (search for similar items in EconPapers)
Date: 2008-07
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: The welfare costs of unreliable water service (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:9812

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