Urban Water Utilities Research Articles

Managing water in the city of the future; strategic planning and science

1 IntroductionIncreasing global change pressures, escalating costsand other risks inherent to conventional urban watermanagement are causing cities to face ever increasingdifficulties in efficiently managing scarcer and lessreliable water resources.In order to meet these challenges SWITCH(Sustainable Water Management Improves Tomor-row’s Cities Health) is facilitating a paradigm shift inurban water management. SWITCH is an EU fundedaction research program being implemented and co-funded by a cross-disciplinary team of 33 partnersfrom across the globe, including 17 from the EU and12 from developing countries. The ‘‘consortium’’comprises the academic and urban planning fields,water utilities and consultants. This network ofresearchers and practitioners are working directlywith stakeholders in ten cities (see Fig. 1). Theoverall goal behind this global consortium is tocatalyse change towards more sustainable urbanwater management in the ‘‘City of the Future’’.Demonstrating research and sharing knowledgeacross a range of different geographical, climaticand socio-cultural settings is expected to lead toglobal adoption and acceleration of more sustainablesolutions.The SWITCH research process is a combination of:• Learning Alliances—SWITCH is linking up awide range of stakeholders at city level to interactproductively and to create win-win solutionsalong the water chain. They consist of a seriesof structured platforms, at different institutionallevels (national, river basin, city, communityetc.), designed to break down barriers to bothhorizontal and vertical information sharingthereby speeding up the process of identification,adaptation, and uptake of new innovations. LA’shave been established in Accra, Alexandria,Beijing, Belo Horzionte, Birmingham, Cali,Hamburg, Lima, Lodz, Tel Aviv and Zaragoza.• Action Research—SWITCH is carrying out moredemand-led, action-orientated research in citieswith a view to achieving greater integration andwider impact through the Learning Alliances.• Multiple-way learning—SWITCH is promotingmultiple-way learning, where European citieslearn from each other and from developingcountries, and vice versa.2 Strategic planning and scientific assessmentof strategiesOne goal of SWITCH is to develop new strategicplans for water management in the cities mentioned

Development of decision support tools for decentralised urban water supply management in Uganda: An Action Research approach

This paper presents a study in which four real-life problem situations are used to explore the challenges of developing and implementing decision support tools within an urban water utility. In the study, an Action Research approach is used, with theoretical considerations leading to specific actions being implemented, which in turn yield results that are used to reflect upon the original theoretical assumptions. Results of the study emphasize the need for proper problem-structuring prior to the formulation of actions; the challenges of moving from planning to action; the importance of user involvement in the development of tools; and how a good match of people, problem-structuring, proactiveness and participatory tools development is required for effective decision support provision. The study also highlights the challenges of embedding decision support within existing work systems in organizations. The Action Research approach is shown to be useful in bridging the gap between theory and practice, aiding the development of decision support tools of immediate and practical benefit to organizations.

Public Provision for Urban Water: Getting Prices and Governance Right

Public sector monopolies are often associated with inefficiencies and inability to meet rising demand. Scholars attribute this to fundamental problems associated with public provision: (1) a tradition of below‐cost pricing due to populist pressures, (2) owner–regulator conflicts of interest, and (3) perverse organizational incentives arising from non‐credible threat of bankruptcy, weak competition, rigidities, and agency and performance measurement problems. Many governments worldwide have shifted to private provision, but recent experience in urban water utilities in developing countries has shown their limitations because of weak regulatory regimes compounded by inherent problems of information, incentives, and commitment. This article examines the paradoxical case of the Phnom Penh Water Supply in Cambodia to illustrate how public provision of urban water can be substantially improved by getting prices and governance right. Findings have implications for the search for solutions to provide one billion people worldwide with better access to potable water.

Incorporating Unaccounted for Water into the Performance Measurement: An Application to the Indian Water Sector

In some Indian cities, unaccounted for water (UFW) is more than half of the water produced. Benchmarking must credit utilities for reduction in UFW and improvements in service delivery. Using data from 20 Indian urban water utilities, the study evaluates utility performance considering that reduction in UFW is costly. It applies directional output distance function as an analytical tool for measuring technical inefficiencies of the utilities. The results exhibit that at the mean level, the Indian water utilities have potential of increasing water delivery level and reducing UFW by 20 percent. About half of that can be realized by changing the scale of operation. The results concerning returns to scale support the idea that water should be priced at marginal cost of supply. The regression results reveal that percentage of metered connections and length of distribution network are major determinant of performance of water utilities.

Water services regulation for the urban poor: Zambia

There is rapid urbanisation in developing countries, where UN Habitat estimates that 80% of the world urban population will live by 2030. Urban water utilities are facing a challenge of continuously extending services to the rapidly expanding towns and cities, particularly so when most of the population growth is absorbed by slums, leading to an increasing number of the urban poor. Economic regulation of urban water service providers is therefore necessary to guard the equity principle and promote universal water service coverage that is an overarching target for achievement of UN millennium development goals (MDGs). This paper reports on research carried out in Lusaka, Zambia, one of seven case studies in a global research study on whether the needs of the urban poor have been incorporated, as a primary duty of regulation. The study found that NWASCO, the Zambian regulator, has made commendable progress towards ‘good regulation’ principles of independence, accountability, consistency, transparency, proportionality and equitable targeting of interventions. Clearly, there are good lessons for policy makers in other developing countries to learn from the way regulation structures, systems and procedures were set up in Zambia, and how they have evolved over time. Increased consumer participation will make the regulatory regime more pro-poor.

Partnerships for improving water utility management in Africa

Urban water utilities in developing countries face enormous challenges in meeting the water needs of growing urban populations. Many of the challenges stem from poor utility management practices and the lack of a commercially oriented culture. For many years the debate on how to address this problem has been dominated by two extremes. On the one hand, private sector participation (PSP) has had only limited success. On the other, public management reform, which urges the creation of incentives for public utilities to become more efficient and commercially oriented, has not yet taken hold due to the slow pace of institutional reforms in developing countries. Given this situation, major players in the sector are seeking alternative approaches to improving utility management and performance in developing countries. Such alternative approaches include innovative multi-sector partnerships between private, public and civil society. This paper discusses a partnering approach (pioneered by the Water Utility Partnership (WUP) of Africa) between Loughborough University, Severn Trent Water, six African water utilities and utility management consultants. The aim of the partnership is to increase the management capacity of utility companies in order to improve the performance of water utilities in Africa. This innovative model has implications for policy and practice in this field.

Re-examining the ‘low water tariff’ hypothesis: lessons from Hyderabad, India

Researchers suggest urban water utilities in India operate on low tariffs, consequently earning revenue insufficient to recover operation and management (O&M) costs of water storage, treatment and distribution. From findings of a field study conducted in Hyderabad, India, the paper suggests otherwise. While ‘stated’ tariffs are low, households currently pay tariffs far higher than in other regions of the world because of institutional indifference toward improving service attributes, particularly quantity and poor measurement of domestic water consumption; following which, poor communities pay more for less. While poor cost recovery precludes improved performance of urban water utilities, targeting this facet alone at the cost of other aspects of service does not, as the paper demonstrates, necessarily lead toward qualitative service improvement or toward improved households' perception of water services.

Bill payment behaviour in urban water services: empirical data from Uganda

Previous research has shown that, despite the low-income levels in developing countries, cost recovery is a prerequisite for sustainability of urban water services. The challenge for service improvement is continually growing, as it is projected that 88% of the increase in global population will live in urban centres of low-income countries by the year 2015. Yet bill collection efficiency in some African urban water utilities is lower than 50%. In order to improve cost recovery levels, the new public managerialism paradigm suggests that water utility managers need to change their business philosophy from being supply-driven to engendering customer focus. This study used empirical data, obtained through a cross-sectional survey in 11 major towns in Uganda to establish customer perceptions that influence bill payment behaviour of water utility customers. Regression analysis of data obtained showed that service value and customer satisfaction contribute about 20% of the variation in customer loyalty, which in turn significantly influences bill payment behaviour. Therefore, in order to improve cost recovery, utility managers have to work towards improving customer satisfaction and perceived value of the services delivered. The effect of corporate image, of significance in high-income countries, was not found to be relevant in Uganda.

Roof Water Harvesting for Domestic Water Security: Who Gains and Who Loses?

Roof water harvesting is being widely promoted as a panacea for the growing drinking water crisis in India and many underdeveloped and developing countries. This article analyzes the scope, physical feasibility, and economic viability of roof water harvesting systems across classes and under different physical and socioeconomic situations. This article argues that roof water harvesting systems (RWHS) are not alternative to public systems in urban and rural areas of regions receiving low rainfall. Hydrological opportunities for RWHS are very poor in urban and rural areas. The systems offer very little scope in ensuring domestic water security for urban housing stocks of low- and middle-income groups. At the same time, they offer tremendous potential for independent bungalows having large roof area. However, their physical feasibility is very poor in urban areas. Their economic viability as a supplementary source of domestic water supply seems to be poor in urban areas, when compared to augmenting the supplies from the existing public systems. The incredibly low rates charged for domestic supplies by urban water utilities and government subsidies for RWHS would only lead to the urban elite increasing their access to water supplies, while the burden on water utilities would remain unchanged. This will lead to greater inequities in access to water supplies. At the same time, in rural areas with dispersed populations and hilly areas, RWHS may be economically viable as a supplementary source to already existing public water supply schemes. But as its impacts are not likely to be uniform across classes, government subsidies are not desirable. In hilly regions receiving high rainfalls, government investment for community water supply schemes could be replaced by heavy subsidies for installation of RWHS.

Paying for water services: effects of household characteristics

Maximising cost recovery is currently a top priority for managers of urban water utilities in low-income countries. This research was carried out in 11 major towns of Uganda to establish which household characteristics influence payment for water services. A questionnaire was used to collect data on customer satisfaction, customer loyalty and several socio-economic variables. Using regression techniques, it was established that the following attributes of the household head moderated the satisfaction and loyalty relationship: gender, occupation and level of education. Other significant factors were household income and property tenure status. These results could be used to make water utilities customer-focused.

Information is a prerequisite for water demand management: experiences from four cities in Southern Africa

Implementation of urban water demand management (UWDM) in Southern Africa has been dismal since the inception of its promotion and advocacy as part of the broad framework of Integrated Water Resources Management (IWRM) after the Rio Earth Summit in the early 1990s. Part of the reason for this failure is the absence of proper information system and technology within urban water utilities. This paper outlines a possible Management Information System (MIS) for effective implementation and monitoring of Water Demand Management (WDM) in urban centres of Southern Africa. The paper exposes why a MIS for WDM is the technology backbone for implementation and monitoring and this is substantiated by observations made on four case studies namely Bulawayo, and Mutare in Zimbabwe, Maputo in Mozambique and Windhoek in Namibia and through a survey of available MIS modules. The four case studies reveal that cities with a comprehensive MIS and WDM strategy have a sustained long term successful WDM programme. This paper is an extract of a report directed and funded by the World Conservation Union (IUCN).

Integrated Resource Planning for Water and Wastewater

This paper describes the use of integrated resource planning for water and wastewater service provision by a major urban water utility. This methodology aims to meet the water and sewerage needs of the community at the least cost and includes an explicit analysis of the costs and benefits of measures that reduce the demand for water and the discharge of wastewater effluent. It therefore requires disaggregation of the demand for water into end-uses and a consideration of the linkages between the water supply and sewerage components of the business. This approach has significant advantages in economic, environmental, and social terms. The case study results indicate that significant investments in water efficiency programs are justified on economic grounds, particularly where augmentation of water and sewerage infrastructure is planned. Three studies undertaken as part of Sydney Water's efforts to integrate supply- and demand-side planning are described in this paper: first, a major integrated resource planning exercise designed to reduce demand for water by up to 35 percent, costing more than AU$25 million; second, a case study in a series of small towns where the benefits arise from reducing the capacity of sewage treatment plants by reducing wastewater flow; and third, in a major industrial region where water efficiency measures integrated with reuse measures reduce overall costs.

The Australian experience: managing a non‐metropolitan urban water utility ‐ paradigm shifting towards a new mindset

This paper examines the operating environment of non‐metropolitan urban water authorities in Victoria, Australia. It analyses the policy framework within which the industry operates and demonstrates that this framework generates inconsistencies between central agency driven economic outcomes and local politician driven social efficacy outcomes. The paper poses a solution based in a new leadership mindset of entrepreneurially driven core business centres providing co‐ordination rather than direct services and the adoption of an approach recognising discontinuous change rather than the parameters founding “new managerialism” driven by Australian public sector reform agencies. The author asserts that these businesses will be required to paradigm shift ‐ to move from service providers to service managers, to develop networks and strategic alliances with service providers and to embrace mindsets beyond the structured “new managerialism” of the 1980s. The paper draws on studies concerning network organisations, loosely coupled clusters and quality, customer focused solutions. It analyses the need for the implementation of the mindset underpinning these organisations into the sector.

SPATIAL INTEGRATION OF URBAN WATER SERVICES AND ECONOMIES OF SCALE

This research attempts to analyze economic effects of spatial integration of urban water service markets in Korea, employing the notion of economies of scale in terms of cost‐effectiveness. The economies of scale are measured by the elasticity of supply with respect to the production cost from the translog cost function of urban water supply enterprises. It was found that the economies of scale in most urban water utility firms of Seoul Metropolitan region have continuously increased during the period 1989–1994. While the economies of scale would be hardly influenced by the changes in population density, they would tend to decrease marginally in response to the rise in employment density. If the urban water markets of the Seoul Metropolitan Region were consolidated into a single water service market without any changes to the current spatial network of water supply and regional economic attributes, the production cost would be reduced up to 47.1 percent of the actual cost in 1994. Those savings would be enough to make up for the financial deficit of the water production of the Seoul Metropolitan Region.

Accounting‐Induced Distortion in Public Enterprise Pricing

Municipal water utilities commonly aim to set prices at average cost. Because of various omissions and owing to inflation, unadjusted accounting data understate the economic costs of fixed assets and thus generate inefficiently low prices and high consumption rates for the output of these enterprises. We investigate the nature and extent of undercosting and underpricing for a group of large urban water utilities in the United States. Economic costs appear to be significantly greater than the corresponding accounting measures for the cases studied.

Specification and estimation of the effect of ownership on the economic efficiency of the water utilities

A stochastic frontier cost function is used to specify the cost of inefficiency of publicly and privately owned urban water utilities in terms of their different ownership structures and firm-specific characteristics. A translog cost function is used to approximate the production technology. Both mean and variance of inefficiency are specified in the model as functions of firm-specific factors. Estimation is done in two steps, which does not require a set of stringent distributional assumptions as needed for the estimation of a standard frontier model. Results show that when the operation is small, privately owned water utilities are comparatively more efficient. Public water utilities are comparatively more efficient when the scale of operation is large. A generalized likelihood ratio test of the null hypothesis that the inefficiency effects are not firm-specific is rejected in favor of a firm-specific specification.

Water Supplies and Nationwide Drought of 1988

Findings of a survey about experiences managing public water supplies during the drought of 1988 are reported. Responses were obtained from 408 of the 501 large utilities in the United States to whom the questionnaire was sent. Although the news media correctly portrayed the drought of 1988 as being serious in some regions of the country, the fact that one‐half of all urban water utilities called for conservation revealed very widespread impacts. About one‐half of the utilities had ordinances or other written drought policies. Only 28% of the reporting utilities had a technicaal report, computer program, or some other form of technical support for triggering conservation. Managers were generally pleased with their decisions, but the existence of technical support increased their level of satisfaction.

Water supply for New York City in the 1980s

New York City, perceived as a prototype of aging water systems, faces the four fundamentals of urban water utilities: providing sufficient quantities, maintaining high quality, ensuring reliability of supply, and financing capital needs. The economic viability of New York City—and all older urban areas—depends on meeting these criteria successfully.

Residential Water Conservation

Severe pressures on many urban water utilities are the result of water shortages, high treatment costs, scarce supplies and rapid growth. Various water-conservation techniques can be used to reduce the demand for water by urban customers. These include restrictions on use, installation of water-saving devices, metering, horticultural changes, pressure reduction, reuse, and public education. The effects of metering, water-saving devices and price increases on residential water demand are explored for some typical communities. Secondary effects of conservation on revenue production and return flow are also discussed.

Puerto Rico Aqueduct and Sewer Authority

This article discusses the history of the Puerto Rico Aqueduct and Sewer Authority. The article begins by providing a brief overview of how the Puerto Rico Sewer Service was created by law as a dependency of the Puerto Rico Department of Public Works, to manage all sanitary sewerage systems. Both services were grouped in 1945 into the Puerto Rico Water and Sewer Service. In 1949, Law 163 created the present Puerto Rico Aqueduct and Sewer Authority. Organization of the authority is discussed, along with interagency relations, economic assistance, water rates, and financing of urban water works, sewers, rural systems and utility plants. In Puerto Rico, the public corporation has turned out to be a very effective instrument to that end. The government itself, upon creating the authority, bestowed upon it the autonomy and flexibility necessary to enable it to improve service vastly in just a few short years.