1. Sidrat Asim Pakistan Urban Forum Willingness to Pay Study for Improved Water Supply Services in Karachi

2. Problem Identification  Clean drinking water remains the greatest perceived need of the people of Karachi  Only 4 hours of continuous water supply  Flat Rate Tariff based on floor areas results in high consumption  Low Tariff does not cover Operation and Maintenance Cost  Public forced to buy water from private water tankers  Bottled water usage for drinking purpose is high

3. Water Tariff Source: KWSB

4. Water Supply Summary in South Asia Source: Water in Asian Cities, ADB report

5. Objectives  examines the current water usage habits of the people in the city using the Averting Expenditure Approach

6. Theoretical Framework Valuation Stated Preference Contingent Valuation Method Conjoint Analysis Revealed Preference Averting Expenditure Approach Travel Cost Method Hedonic Pricing Method Cost of Illness Methods

7. Averting Expenditure Approach  Strengths:  based on observed behaviors and market data  relatively simple to do  Weaknesses:  underestimation of the true WTP

8. Averting Behavior Water Tankers Bottled Water Suction Pumps Boring Wells Water Purification

9. Description of the Study Site

10. Karachi

11. Water Supply  354573 residential water connections in Karachi  58% households connected  Water demand estimated at 1080 million gallons daily (MGD)  Water Supply is limited to 650 MGD  K-IV Project may augment water supply to 1300 MGD in 5 years  Water Tanker mafia siphons off over 40% water supply

13. Gulshan-e- Iqbal  One of eighteen towns in Karachi  Main residential area of the city  Population of over a million people  Educational hub of the city with a concentration of higher education institutions within its vicinity

14. Methodology Primary Survey

15. Survey Site

16. Survey Face to face interviews Representative of all income groups and ethnicities in Karachi Conducted on public holidays in last week of December 2012 718 households visited by eleven surveyors Population: Connected Households Sample: 400 households

17. Results Descriptive Statistics

18. Importance of Water 37% of the respondents rated water as the most important public utility

19. Ratings of various public goods Water ranks second most important public utility after health

20. Income and Expenses Households spend the least amount on piped water

21. Income

22. Source of Water used for Washing 99% use piped water as primary source of water for washing 56% use boring wells as a secondary source for water 28% use water tankers as a secondary source for water

23. Source of Water used for Drinking 60% people use piped water as a primary source 22% use mineral water a 4% use water from water tankers. 36% use mineral water as a secondary source of drinking water

24. Current Water Satisfaction Surveyed households receive an average of 27 hours of water supply in a week Users were only moderately satisfied with current water supply

25. Coping Behavior 80% of the households run motors 10% have a well installed electric motors run for 3 hours/day Onetime cost of having a well installed was Rs. 45800 on average 23% use water tankers 50% drink mineral water

26. Coping Cost

27. Coping costs by Income Coping costs are higher for higher income households

28. Water Purification Methods 60% of the households use some form of water purification method

29. Water Purification by Source Piped water users need to use water purification methods more than those who use other sources of water for drinking

30. Empirical Results

31. Household Income and Household size affect Coping costs positively. (1)(2) LABELSCoping Cost Water Purification Income Class885.0***-0.266*** (3.257)(-3.784) Household Size121.6** (2.184) Constant-409.31.235*** (4.579) Observations189390 R-squared0.102

32. Discussion

33. Limitations  Study only focuses on the demand side  Study does not deal with the institutional weakness of the KWSB or issues of bill collection and financial management  Study is restricted to Blocks 4 and 7 of Gulshan-e-Iqbal town in Karachi

34. Thank you