Water Economics

IWP’s research on water economics takes various approaches from institutional economics, behavioural economics and experimental economics. Projects include:

  • Survey on water demand in Singapore (households, hotels, industries)
  • Hotel water-use efficiency in Singapore
  • Economic evaluation of sustainable drainage

Smart showers

Summary

In August 2008 the embankments of the Koshi river in Bihar State, India, broke causing massive flooding of a large part of northern Bihar. Embankments provide flood protection in many river catchments. However, river embankments have been controversial as rivers may have high sediment loads that shallow the channels between embankments. Constraining the river by embankments could actually increase flood risks.

In addition, some benefits of periodical floods, such as fertilisation of agricultural lands, are lost when embankments are in place. Furthermore, the presence of embankments could make people more complacent towards flood risks, which in itself can increase flood risks. Once a flood occurs, political processes, such as public pressure for action and compensation, could lead to ever increasing investments in embankment projects, thereby increasing risks and flood losses.


Objectives

Are embankments the best possible solution for flood risk management? Key research questions include the following aspects:

  1. What impacts have embankments had on river dynamics?
  2. Do embankments reduce perceived flood risk? What is the narrative content of the “public pressure for action” that has already been noted above?
  3. What are the costs and benefits of river embankments from the perspectives of different stakeholders?
  4. How can non-traditional sources of flood data help flood risk estimation?
  5. What are the reforms and institutional changes required to strengthen embankment governance?

Research Cluster

Water Economics, Water Governance, Water Science and Public Policy


Researchers

Robert Wasson

Summary

The objective of the ABC Waters Certification project is to develop a business case for private developers to implement Urban Sensitive Water Design Features. This entails first and foremost understanding developers’ motivations and concerns, as well as demonstrating the benefits of incorporating ABC Waters Design


Research Cluster

Water Economics


Researchers

Joost Buurman, Tommy Kevin Lee, Professor Yu Shi Ming, Sonia Akter

Summary

Design of water infrastructure and water policies are usually based on projected needs and measured historical data that span typically only a few decades. The chance of extreme events being included in these data is rare. Assuming the measured data is representative for the system and extrapolating these data to get values for extremes can result in inefficient systems and even amplify extreme events. To develop robust, resilient and disaster-proof water infrastructure and water policies different types of data, assumptions and models are needed. One source of alternative data are paleo-climatological studies that investigate the past climate using alternative methods such as tree-ring measurements, analysis of sediment depositions, and investigation of historical data.


Objectives

The overarching aim of this study is to investigate if paleo-climatic information on floods and droughts would make a difference in short-term water management decisions and long-term water policy decisions.

A hydro-economic simulation model of the Ping/Chao Praya river basin in Thailand will be developed to analyse dam operations, water policies, and emergency management using only measured data records, and using both measured and paleo-climatological data. The results will indicate the value of including alternative sources of data and if changes in dam operations or water policies would be needed.


Research Cluster

Water Economics, Water Science and Public Policy


Researchers

Joost Buurman

Summary

This study aims to study the effects of water tariff structure on consumption behaviour by exploiting a unique policy change that was recently implemented in Hangzhou, China. Before the recent tariff change, water rates in Hangzhou had not been changed since 2005. On 1 January 2015, Increasing Block Tariffs (IBTs) were first phased in to cover the 570,000 households who lived in buildings with less than eight floors and had individual meters under administration of the Hangzhou Water Utility installed in their homes.

These IBT households constitute 52% of all residential households. A small group of newly assigned-IBT households can opt out of the IBT if the house is located in an ‘urban village’ and if the house is rented. All other households, who lack individual Hangzhou Water Utility meters or live in buildings with at least eight floors, still face a uniform water rate. This status will persist so long as these households’ consumption is monitored using sub-meters administered by their specific communities (and not by the utility). With the change to the IBT, water tariffs have also been raised significantly.


Objectives

The aims of the project are two-fold:

  • The first aim is to evaluate the effects of IBT adoption on water consumption and water conservation in a major Chinese city (Hangzhou). To the best of our knowledge, this will be the first empirical study of IBT implementation using panel data in China.
  • The second aim is to better understand households water use practices, and specifically whether they trust that network water is safe to drink, relative to other more expensive options such as bottled water.

Research Cluster

Water Economics


Researchers

Li Li

Summary

There are a growing number of papers examining the notion of aid effectiveness at a sector level. With the development of relatively disaggregated data furnishing details about aid flows to different social sectors, a set of empirical studies has focused on the impact of aid on various development indicators such as infant mortality, primary school enrollments and overall human development. Among the various sectors of interest to developing countries, the water supply and sanitation (WSS) sector is of considerable importance for several reasons, yet rather under-studied.

In a project funded by IWP, Gopalan and Rajan (2016a) undertook an empirical investigation of the relationship between aid flows to the WSS sector and aid outcomes in terms of improved access to water and sanitation for a large panel of countries, across different levels of income categories. In related work (also as part of the same IWP project), Gopalan and Rajan (2016b) focus exclusively on effectiveness of aid disbursements from multilateral donors to the WSS sector.

As a follow up to the above project, there is scope for significant extension of empirical work, as the related empirical literature on aid effectiveness concerning the WSS sector in developing countries is still at a nascent stage.


Objectives

Overall the papers will attempt to make an empirical contribution to the growing interest and understanding of assessing aid effectiveness at the sector-specific level, with a particular focus on the WSS sector.


Research Cluster

Water Economics, Water Governance


Researchers

Eduardo Araral

Summary

The household water supply situation in Kathmandu, Nepal, has become increasingly difficult over the past decade. The city has seen little capital investment in providing water services, whilst the population of Kathmandu has more than doubled, in part due to the political instability and the resulting rural to urban migration. This has worsened pressures on the city of Kathmandu to provide viable drinking and potable water options for urban residents. As the municipal water supply system has continued to deteriorate, households have increasingly sought out ever more expensive private solutions.

The methodology entails interviewing approximately 1500 households who were interviewed as part of an earlier study in 2001. This past study tried to better understand how households were coping with the unreliable water supply situation and our current study will attempt to revisit these questions by trying to gauge how the worsening water supply situation in Kathmandu from 2001 and 2010 has affected the people.

Major infrastructure improvements to the Kathmandu water supply system are now under construction and should be completed in the next few years. Conducting this proposed second-round survey of households first interviewed in 2001 will provide comprehensive baseline data from which to assess the benefits of the new infrastructure in the future when it comes online.


Objectives

In this research project we propose to make an in-depth examination of how households’ have coped with this increasingly desperate, chaotic water supply situation, and the consequences of this situation for both poor and non-poor households.


Research Cluster

Water Economics


Researchers

Wu Xun, Namrata Chindarkar, Yvonne Chen, Dale Whittington, Stuti Rawat, Aditi Raina

Summary

Droughts are complex natural hazards that are difficult to identify, measure and manage, as they are context-specific phenomena and different water users are affected differently. However, drought is a hazard for humans only if there are socio-economic impacts: a meteorological drought can exist without socio-economic impacts. This is because socio-economic droughts are not only caused by lack of rain, but also by water management (e.g. use of reservoirs) and the ability of people to cope and recover from it. Yet socio-economic drought is hard to measure because secondary impacts, for instance increases in food prices, may be more important than primary impacts and impacts could continue for a long time, even after the drought has ended. As policy-makers will need to deal with water demands and possibly demands for financial compensation during droughts, they would need to have accurate information on the socio-economic drought.


Objectives

This study aims to contribute to better management of droughts risks. Specifically, it aims to determine when there is a drought from socio-economic perspective. It will do so by comparing hydro-meteorological drought indicators with drought experiences of different types of water users in the Vu Gia-Thu Bon river basin in terms of frequency/duration and severity as described in the research methodology below. The study will use semi-structured interviews and a survey to find the degree of correspondence between several hydro-meteorological drought indicators and drought experiences of water users in the Vu Gia – Thu Bon river basin in Central Vietnam.


Research Cluster

Water Economics, Water Science and Policy


Researchers

Joost Buurman

Summary

Efforts to improve water delivery in urban areas often are constrained by limited financial resources, inadequate institutional capacity, or a limited water supply. Many national and local governments strive to close the gap between water supply and demand, using some combination of supply enhancement and demand management strategies. Supply side efforts include reducing leaks and non-revenue losses, and developing new sources through water capture, recycling, or desalination. Demand management involves promoting water saving devices, increasing public awareness, raising water prices, and imposing restrictions on water use.

Water and wastewater tariffs are critical features of water delivery programs. Appropriately designed tariffs can be helpful in achieving the goals of revenue sufficiency, equity, and affordability, provided that other desirable aspects of water governance and resource policies are in place. Prices also are helpful in communicating resource scarcity and promoting household practices that are consistent with the goal of managing urban water resources in sustainable fashion.


Objectives

Researchers in the Institute of Water Policy have examined the water and wastewater tariffs pertaining to the domestic and non-domestic sectors in 60 cities in both developed and developing countries. For each of the cities, we have calculated the water and wastewater bills for a household consuming 20 m3 of water per month, and for a non-domestic facility consuming 100 m3 per month. In addition to calculating the combined water and wastewater bills, we have disaggregated the bills into the pertinent tariff components, to describe the proportions of fixed, variable and miscellaneous charges paid by consumers.

Direct monetary comparison of bills is not completely helpful without analysing the socio-economic conditions in each city. Hence, in our study, we express the monthly household water and sewerage bills as a portion of household income. We also estimate the per capita annual water and wastewater bill for daily consumption of 155 litres, and we compare this with the gross regional product (GRP) in each city (or province/state, in cases where city level GRP is unavailable) to understand the relationship between expenditures on water and wastewater services and economic development.


Research Cluster

Water Economics


Researchers

Sonia Ferdous Hoque, Dennis Wichelns

Summary

Poor sanitation, water quality, and hygiene contribute to diarrheal diseases that cause approximately 2 million deaths per year (Lozano et al. 2012). A number of recent studies show that latrines successfully reduce diarrheal illness and malnutrition, particularly among young children (Barnard et al. 2013; Heijnen et al. 2014; Dickinson et al. 2015). Based in part on this evidence for the importance of sanitation (WHO/UNICEF Joint Monitoring Programme for Water Supply and Sanitation 2014), the water, sanitation and hygiene (WASH) community is now investing heavily in efforts to scale up sanitation coverage across low-income countries (Patil et al. 2014; Dickinson et al. 2015). However, the vast majority of prior evaluations of sanitation programs have focused only on short-term (<2 years) impacts (Waddington and Snilstveit 2009).


Objectives

The aims of this study are to i) fill this gap by providing the first estimates of the long-term impacts from a randomized controlled trial (RCT) of a sanitation promotion campaign, ii) contribute to the literature on technology adoption by exploring complementarities between environmental health technologies.


Research Cluster

Water Economics


Researchers –

Marc Jeuland

Summary

Participation has often been treated as a panacea for development issues or as means of increasing transparency and accountability among development beneficiaries. As a result, there has been a push to form government-community partnerships, resulting in the formation of many non-government organizations and vested interest groups with multiple agendas. However, the social and power dynamics that drive these community engagements may increase the complexity of such initiatives, ultimately influencing both the success of the development project(s) and the level of empowerment among the beneficiaries (Keevers et al. 2008, 460). Moreover, the various levels of participation as identified by Arnstein (1969) have been repeatedly cited but it remains unclear how participatory approaches in technical domains such as water service delivery fit into the framework.


Objectives

This research aims to study and assess existing processes of community participation in the management of water supply in a specific community in Indonesia (Surakarta). In addition to identifying the social and power dynamics that drive community engagement, the research will also assess the scope, process and outcome of the participatory efforts in water projects as an attempt to measure their role in contributing to goals of sustainability in:

  • Technical service delivery, e.g., ensuring consistent services and good urban water management
  • Empowerment of beneficiaries for other development activities; and
  • The social implications of participation stemming from these good management and empowerment, including their distribution across all segments/groups of the community.

Research Cluster

Water Economics


Researchers

Marc Jeuland