Water and sanitation service delivery, pricing, and the poor: An empirical analysis of subsidy incidence in Nairobi, Kenya.

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EFD

Water and sanitation service delivery, pricing, and the poor: An empirical analysis of subsidy incidence in Nairobi, Kenya.

David Fuente

Josephine Gatua

Moses Ikiara

Jane Kabubo-Mariara

Mbutu Mwaura

Dale Whittington

 

EfD-Kenya partnered with Nairobi City Water and Sewer Company (NCWSC) to estimate the distributional incidence of subsidies delivered through the water tariff in Nairobi, Kenya. In particular, we combine socio-economic data from a survey of 745 NCWSC customers with data on metered water use from NCWSC’s customer billing records to estimate subsidy incidence.  We find that the increasing block tariff implemented by NCWSC is not effectively targeting subsidies to the poor. This is due to three factors: 1) income and water use are not highly correlated among NCWSC customers, 2) all water is sold below full cost, and 3) the poorest residents do not receive a subsidy delivered through the water tariff because they do not have a piped water connection. These findings suggest that the utility should use the tariff to pursue economic and financial objectives and other policy instruments (e.g. means-testing) to target subsidies to low income households.
Project dates 2013-2015
Start Year: 
2013
End Year: 
2015
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