Cross-subsidies for improved sanitation in low income settlements: Assessing the willingness to pay of water utility customers in Kenyan cities
Acey, C., Kisiangani, J., Ronoh, P., Delaire, C., Makena E., Norman, G., Levine, D., Khush, R., Peletz, R. (2019). Cross-Subsidies for Improved Sanitation in Low Income Settlements: Assessing the Willingness to Pay of Water Utility Customers in Kenyan Cities. World Development. 115: 160-177
Most residents of the developing world do not have access to safely managed sanitation services, and large financial investments are required to address this need. Here we evaluate surcharges on water/sewerage tariffs as an option for supporting these investments in low-income neighborhoods. We investigated willingness-to-pay (WTP) for a pro-poor sanitation surcharge among customers of two urban water utilities in Kenya. Applying qualitative and quantitative methods, we conducted semi-structured in-depth interviews, focus-group discussions, and a double-bounded contingent valuation method for measuring WTP. We varied scenarios quasi-experimentally to study the effects of messaging and surcharge characteristics and evaluated factors associated with WTP.
Our study finds that mean WTP was 290 KES (USD 2.9) per month, about 8% of the average water bill; median WTP was 100 KES (USD 1). In a multivariate analysis, WTP was significantly higher among customers that were younger, wealthier, shared toilets, and had higher water bills. WTP was also higher among customers that trusted the utility and distrusted the county government. Of our randomized scenarios, only the bill type was found to significantly influence WTP; WTP was higher if the surcharge was presented as a proportion of the customers’ last water bill vs a flat amount. Our findings suggest that in a sector that struggles to provide universal access to sanitation services, cross-subsidies may offer a means to support financing of safe sanitation for low-income households. These results indicate there are opportunities for cross-subsidies in urban Kenya that may be relevant for a wider understanding of surcharge payments that support basic services for low-income citizens.