November 2018
Are Kenyan water customers willing to pay a pro -poor sanitation surcharge?
The Kenyan government estimates that 500 billion KES ($5 billion USD) are needed to achieve sanitation coverage targets in urban areas by 2030. To finance these infrastructure improvements, the Ministry of Environment, Water, and Natural Resources is looking at various financing options, including private sector participation, foreign aid, and cross-subsidies. Using a double-bound dichotomous choice method coupled with qualitative interviews, this study investigated willingness to pay for a pro-poor sanitation surcharge among customers of two Kenyan water utilities. 75% of respondents were willing to pay a surcharge, with just over half willing to pay up to 100 KES ($1 USD) per month. The primary determinants of willingness to pay were trust in the water utility to manage the pro-poor surcharge, feelings of solidarity towards people living without sanitation, and satisfaction with current water services.
Introduction
In urban Kenya, 69% of people use shared, unimproved, or no sanitation facilities (WHO and UNICEF, 2017). Inadequate sanitation infrastructure contributes to poor public health, particularly in low-income areas. WHO estimates that the 17,597 cumulative cases of cholera reported since 2014 in Kenya are attributed to poor sanitation (“WHO | Cholera – Kenya,” 2017). The Kenyan government estimates that 500 billion KES ($5 billion USD) are needed to achieve sanitation coverage targets in urban areas by 2030 (Ministry of Environment, Water and Natural Resources, 2013). To date, revenue generated from sewer and sanitation user charges in Kenya are often diverted to fund water supply investments and operations, with little money going towards sanitation investments or operations (WSP, 2011). Thus, innovative ways to fund sanitation improvements are needed.
Other countries provide interesting examples of innovating sanitation funding. Since 2007, the Lusaka Water and Sewerage Company in Zambia charges all of its customers a sanitation levy (WSUP, 2012). The levy is disbursed to a ring-fenced fund for sanitation improvements in low-income peri-urban areas. So far, disbursements from the sanitation fund have been used to finance the construction of onsite sanitation facilities and condominial sewers (WSUP, 2012). In Burkina Faso, the Ministry of Agriculture and Water implements since 1958 a “fee for sanitation services” on water bills issued by the National Water and Sanitation Utility (ONEA) (WSUP, 2012). All water customers in Ouagadougou with a connection to ONEA pay a fixed surcharge on their water bill and an additional surplus based on water consumed (WSUP, 2012). The surplus is calculated according to a two-tier pricing structure designed to ensure that customers with a sewer connection pay more than customers with onsite sanitation (WSUP, 2012). The funds are used to promote onsite sanitation, provide subsidy support, and increase sewerage connections (WSUP, 2012).
This study sought to determine willingness to pay for a similar pro-poor sanitation surcharge in Kenya. Specifically, we examined whether water customers in Kenya will be willing to cross-subsidize sanitation improvements in low-income areas through an increase in their water bill. Cross-subsidies are already used in the energy and road sectors in Kenya to improve coverage in underserved areas (Boampong and Phillips, 2016; GoK, 2016). Here, we investigated whether a similar concept could be applied to the water and sanitation sector.
In addition, we examined factors influencing willingness to pay. We hypothesized that both customer-level factors (socio-economic status, satisfaction with current services, trust in the water utility, solidarity, perceived benefits) and the implementation strategy (type of messaging, billing method, sanitation technology crosssubsidized) could influence willingness to pay for the surcharge.
