THE ECONOMICS OF HOUSEHOLD RESPONSE TO INADEQUATE WATER-SUPPLIES - EVIDENCE FROM PAKISTAN

Piped water supply systems in many developing countries provide a low and often unreliable level of service. Economically well-off households respond to this by private investment in reliability and service level enhancing devices. This policy is justified by the objective of maximising coverage which necessitates low tariffs. However, when private investment becomes the norm rather than the exception in a community, the aggregate cost of this private investment often exceeds the cost of upgrading the level of service provided by the public systems. In such situations, the public planning process needs to be re-evaluated to account for the private response to inadequate services. This paper, based on a survey of nearly 1000 households in urban and rural Punjab, Pakistan, presents a case study of such a situation.