9.3.4 Effect on Cost Recovery
Recovering the cost of infrastructure investment is closely linked to service reliability. Even when they can afford to do so, users tend to be reluctant or unwilling to pay
to pay for the service, when it is unreliable. Farmers do not like to pay water charges,
not only because they feel or think that water should be free, but also because the
irrigation water supply is frequently unavailable and erratic when it is most
needed.
In many countries, advocating privatisation of the water service has been based
on the fact that households are willing to pay private water vendors more than twice
the operation and maintenance costs of the public distribution system, the reason
being that the vendors offer a better quality and reliability of service.
9.3.5 Distributional Effect
Available evidence indicates that the distributional effects of unreliability are
extremely regressive:
(1) the small firms have little possibility to provide their own supplies as a protection
against unreliable infrastructure. Even when such firms attempt to do so, economies of scale make the costs higher for the smaller firms.
(2) the poor usually pay several times the public price for reliable (private) supplies.
Or, otherwise, they have to spend much of their time to obtain water. In some
countries, to cope with unreliable infrastructure, households may have to spend
1–5% of their annual income as recurrent costs, the poorest households paying
the higher percentage. Very often, it is women who bear these extra costs.
(3) the rich are often able to divert the few good services that are available.
Developing countries are replete with such examples – from the perfectly
maintained road and telephone line to a politician’s farm, to better services
to the richest parts of a city, to preference being devoted to particular shipments
by road or rail. The poor have little voice and are not in a position to pressure
suppliers to improve their reliability.
Generally, unreliable infrastructure exhibit more conspicuous results, on the poor,
at the household level, where unreliability can present significant health hazards. An
extreme example would be a locality, where no household can drink tap water, and
households are forced to switch to alternative sources, decrease consumption, or
install their own treatment facilities, with consequent redundant capacity.
262
9 Quality and Reliability of Infrastructure
Recovering the cost of infrastructure investment is closely linked to service reliability. Even when they can afford to do so, users tend to be reluctant or unwilling to pay
to pay for the service, when it is unreliable. Farmers do not like to pay water charges,
not only because they feel or think that water should be free, but also because the
irrigation water supply is frequently unavailable and erratic when it is most
needed.
In many countries, advocating privatisation of the water service has been based
on the fact that households are willing to pay private water vendors more than twice
the operation and maintenance costs of the public distribution system, the reason
being that the vendors offer a better quality and reliability of service.
9.3.5 Distributional Effect
Available evidence indicates that the distributional effects of unreliability are
extremely regressive:
(1) the small firms have little possibility to provide their own supplies as a protection
against unreliable infrastructure. Even when such firms attempt to do so, economies of scale make the costs higher for the smaller firms.
(2) the poor usually pay several times the public price for reliable (private) supplies.
Or, otherwise, they have to spend much of their time to obtain water. In some
countries, to cope with unreliable infrastructure, households may have to spend
1–5% of their annual income as recurrent costs, the poorest households paying
the higher percentage. Very often, it is women who bear these extra costs.
(3) the rich are often able to divert the few good services that are available.
Developing countries are replete with such examples – from the perfectly
maintained road and telephone line to a politician’s farm, to better services
to the richest parts of a city, to preference being devoted to particular shipments
by road or rail. The poor have little voice and are not in a position to pressure
suppliers to improve their reliability.
Generally, unreliable infrastructure exhibit more conspicuous results, on the poor,
at the household level, where unreliability can present significant health hazards. An
extreme example would be a locality, where no household can drink tap water, and
households are forced to switch to alternative sources, decrease consumption, or
install their own treatment facilities, with consequent redundant capacity.
262
9 Quality and Reliability of Infrastructure