Water Pricing, Affordability and Public Choice: An Economic Assessment from a Large Indian Metropolis

Venkatesh Dutta, N M P Verma

Abstract


The combined use of surface and groundwater that recognizes site-specificity and communities’ preference structure can greatly determine the social and economic sustainability of communities in a growing metropolis. Utilizing both primary and secondary information pertaining to the water sector of India’s capital city, this paper collectively looks at  water demand, public choice and financial sustainability of water supply augmentations in both planned urban and unplanned peri-urban areas having differing levels of planning and resource availability. Households’ preference heterogeneity for water supply scenarios differentiated by their ‘quality’ (potable or non-potable) and ‘source’ (surface or groundwater) has been examined through a carefully designed choice experiment (CE) using iterative bidding game. Household’s choice and preference behaviour for dual quality water (decentralized municipal water for drinking and local groundwater for other purposes), single potable quality water and the ‘business-as-usual’ scenarios are assessed through utility function based multinomial logit (MNL) and nested logit (NL) choice models. The values resulting from the analysis are assessed in terms of water supply augmentation options and their practical limits incorporating the choice and preferences from the heterogeneous planning environments typical of a metropolis.


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International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

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