Objective
To elicit willingness to pay for a continuous water service in urban Mexico, and find out whether Mexican consumers would cover the costs of such a service.
Methodology
A contingent valuation based on surveys was conducted on 75 individuals, users of the water utility in Pachuca, a medium-sized city in Mexico.
Results and Policy Implications
Results confirmed that users are prepared to pay the costs of operation and maintenance of a continuous water supply, particularly considering that such a system would not mean a much higher operating cost (but would capex investments). Such a conclusion supports the policy of charging fees that cover the costs of operation and avoid the use of subsidies in a country in which most of the population pays subsidized water tariffs.
Description
Mexico has, on average, enough natural occurring water to cover the demand of its population (123 million as of 2017), nonetheless, due to irregular distribution both geographical and seasonally, water availability throughout the country is very limited.
Despite official institutions state access to “improved” drinking water has reached 95% of the population in Mexico, and piped water access up to 91%, they do not tell the entire story; most of the population in Mexico, despite having piped access to water, do not receive a good quality service, both in water quality and quantity.
Most cities suffer of deficient water services, particularly when it comes to continuity of service; as of 2010, only 73% of the population received the service on a daily basis (but not necessarily 24 hours a day), 15% received the service every second day, and 12% of the population had water delivered to their households only twice a week or even less frequently. Intermittent water provision has been proved to cause physical damage to the water distribution network, causing leakages and reducing the lifetime of the infrastructure, in Mexico, this leads to a loss of up to 40% of the water produced. Moreover, it is also well known that the damage inflicted to the water mains by providing water intermittently causes recontamination of water; the abrupt decrease in pressure in the pipes during intermittent operation leads to the intrusion of pollutants surrounding the pipes. Most utilities use the lack of hydric and economic resources to justify this situation, but some studies have showed that offering a better service does not necessarily require more water, and that users are willing to pay enough to cover the costs, if they receive an improved service.
Previous studies have shown that when a better level of water service is offered, people are willing to pay for the operation costs, and when amortized by the water authority, even the capital costs can be covered by the users. Additionally, these studies show that when switching to continuous supply, users have used less water, and they are more willing to pay the bills on time, thus shattering the myths claiming that a continuous water supply requires more money and water to operate.
Research questions:
Is the population of urban Mexico willing to pay enough to cover the costs of providing an improved, continuous water service?
Does their current level of service, household income or other factors influence their response?