CHAPTER 2

2.0 LITERATURE REVIEW

2.1 Key issues and considerations on the provision of water

In most third world countries, urban authorities are currently responsible for the provision of a
wide range of services in their municipalities, ranging from duties such as refuse collection,
provision of water and basic sanitation, traffic control as well as activities with social purposes,
such as care of the elderly or the development of leisure activities (Ruiz-Villaverde, 2010).
Various approaches have been used for urban water management around the world. These have
ranged from the private operation of publicly owned and funded systems via service contracts
(common in France) to joint public-private operation and ownership via joint ventures (used in
Colombia) and full privatization such as in Great Britain (David, 2005).

2.2 Availability of Water

Various issues have been documented as important in the sustainable provision of water in small
towns. Availability of water is one of the critical challenges of urban water management
(Schutte, 1996). He further states that water supply for each person must be sufficient and
continuous for personal and domestic uses. These uses ordinarily include drinking, personal
sanitation, washing of clothes, food preparation, personal and household hygiene. According to a
UNDP report (2006) human right to water is limited to personal and domestic uses and foresees a
supply for each person that must be sufficient for these purposes.

2.2.1 Water Quality

David (2005) identifies the issue of water quality as important in the provision of water. He
elaborates that the quality of water required for either personal or domestic use must be safe, that
is, free from microorganisms and chemical substances that constitute a threat to a person’s
health. Mostert (2003) emphasizes the need for water and sanitation facilities and services to be
accessible to everyone without discrimination. According to Nair (2010) accessibility has three
overlapping dimensions which are physical accessibility, economic accessibility and information
accessibility.

2.2.2 Physical accessibility

Physical accessibility implies that the water, and adequate water facilities and services must be
within safe physical reach for all sections of the population. Sufficient, safe and acceptable water
must be accessible within, or in the immediate vicinity, of each household, educational
institution and workplace (UN, 2008). Physical security should not be threatened during access
to water facilities and services. Water and water facilities and services must be accessible to all,
including the most vulnerable or marginalized sections of the population, in law and in fact,
without discrimination on any of the prohibited grounds. Inappropriate resource allocation can
lead to discrimination that may not be overt. States must also make sure that women are not
excluded from decision making processes concerning water resources and entitlements (UN,
2008). The disproportionate burden women bear in the collection of water should be alleviated.
Provision of adequate water to educational institutions currently without adequate drinking water
should be addressed as a matter of urgency (Hellmuth et al., 2002).

2.2.3 Economic accessibility

Economic accessibility implies that the water and water facilities and services must be affordable
for all. The direct and indirect costs and charges associated with securing water must be
affordable, and must not compromise or threaten the realization of other human rights (Ndaw,
2005). To ensure that water is affordable, States parties must adopt the necessary measures that
may include, inter alia: use of a range of appropriate low cost techniques and technologies,
appropriate pricing policies such as free or low cost water and income supplements. The direct
and indirect costs and charges associated with securing water must be affordable, and must not
compromise or threaten the realization of other Covenant rights (McIntosh, 2003). In general, the
water service is affordable when not more than 2% of the average family income needs be spent
on water (Misiunas, 2005).

While the social and public health requirements of access to public water supply have largely
been fulfilled in Organization for Economic Co-operation and Development (OECD) countries,
some still have as many as a quarter of their population without individual household connection
to piped supply. As for wastewater collection and treatment, several OECD countries have a
backlog of investment requirements, with the result that they still do not meet their own water
quality standards (Hellmuth et al., 2002).

2.2.4 Information accessibility

Information accessibility is also noted as one of the key considerations in the provision of water.
Information accessibility includes the right to seek, receive and impart information concerning
water issues. According to a UN report (2002), all states are obliged to make information about
water freely accessible.
 2.2.5 Technical efficiency

Another issue that is crucial in the provision of water urban centers is the technical efficiency of
a utility. Technical efficiency measures the ability of an organization to use its resources
productively to generate outputs (Thompson et al., 2009). From available information,
assessments of efficiency in the use of staff and water resources and in the financial management
of the water account can be done. In the provision of water, a water utility is expected to be
technically efficient.

2.3 Unaccounted for water

Unaccounted for water should also be considered in the provision of water. This should be
considered so that when water budgets are being prepared, under estimates are avoided which
can lead to water shortages in the urban centers. Unaccounted for water is the proportion of
water that it is not extracted from the supply system but not charged to customers whether due to
leakages, illegal connections, poor measurement or uncharged connections (Binnie et al, 2003).

Return on water describes the real cost of production and the revenue which should be earned
from its sale. This should be considered in the provision of water. In the City of Bulawayo in
Zimbabwe, reclaimed water is always sold at a below cost price but accounts for a very small
proportion (between2-4%) of the whole.

2.3.1 Collection efficiency

Collection efficiency is crucial in the provision of water. This will determine the sustainability of
water institutions and the level of service satisfaction by residents. In Zimbabwe, meter reading,
billing and collection are undertaken by treasury staff. Generally in developing countries,
citizens have a habit of paying their bills and arrears have been no higher than 10-15%
(Rosegrant, 2003). According to IPS (1997), in a study done in Bulawayo in 1996, some of the
reasons for growth of arrears were: rise in tariff levels, application of stiff penalties for
consumption above ration, a mass campaign against payment, a computer breakdown which
delays billing and separation of utility bills from rentals. It has been noted that revenue collection
efficiency is also generally low in low pressure and urban poor areas as people are not willing to
pay for an unreliable, inadequate and low level of service (UN. 2002).
2.4 Key Challenges in supply of water in Small Urban Towns

2.4.1 Rapid population growth

Towns with population between 2,000 and 50,000 face special challenges in WSS. The demand
for various technologies; piped water supply in the core, alternative technologies in the fringe
areas and the often rapid and unpredictable water demand growth and spatial expansion require
planning, design, and management skills that go beyond those needed for community-based
management approaches in rural areas (World Bank, 2001). But, unlike larger towns or cities,
these smaller towns often lack the financial and human resources to independently plan, finance,
manage and operate their WSS (Yan, 2010).

2.4.2 Limited government resources

Another key challenge for small town WSS is to allocate limited government resources among a
large number of dispersed towns. According to a World Bank report (2010), for every large town
(50,000 to 200,000 people) there are ten smaller ones (2,000 to 50,000 people). The goal should
therefore be to establish town utilities with the minimum viable investment, and to ensure that
reforms are put in place so that the utilities can meet carefully defined cost-recovery objectives
(World Bank, 2001).

In addressing the small town WSS challenge, governments may need to identify appropriate
management arrangements that can cut across more than one town, ensure that design and
financing requirements are suited to these towns, and make arrangements to secure effective
professional support, for example by contracting with local partners (Martin, et al,. 2009). A
business planning approach that integrates these aspects of service provision and factors in the
role of both utility managers (service provision) and town administrators (regulatory oversight) is
a fundamental part of town WSS (World Bank, 2001).

Water resource scarcity, poor quality, complex and aged infrastructure, high rate of growth of
population and water demand, high water losses in the distribution system, low cost recovery and
high subsidy, poor management and institutional framework are some of the common
characteristics of urban water supply systems in developing countries (Schutte 1996).Various
challenges are faced by urban water institutions which consequently result in poor service
delivery. The main water issues facing Marondera town in Zimbabwe includes; deterioration of
water quality at end users, lack of proper maintenance of networks supplying water to users,
ensuring water supply and sanitation services to all areas in Marondera and these problems are
compounded by the fact that the town has not been able to mobilize sufficient government funds
to address these issues.
However on the other hand despite non availability of funds from the government,
implementation of leakage reduction and control programs is also difficult in many cities of
developing countries where the water supply is intermittent (only a few hours per day) and the
pressure is low (McIntosh 2003). In cities with a low pressure water supply of short duration,
water-saving devices for toilets, bathrooms and kitchens may not be effective. Additionally,
retrofitting with water-saving devices may not be feasible in these cities at least for a few more
years to come, where the majority of the population does not have access to flushing toilets,
washing machines or dishwashers and they may not be attractive to people who are struggling to
get water for basic needs (Nair, 2010).

2.4.3 Poor cost recovery

Poor cost recovery is often regarded as a major contributory factor to the poor sustainability of
urban-water management in developing countries. It reduces the capacity of responsible
institutions to increase service coverage and on the other hand, an urban supply system cannot
survive without a sound financial base and proven methods of cost recovery. Water losses in
poorly managed systems can be considerable and when such losses occur they make economic
viability even more difficult. Major development agencies such as the World Bank support the
economic concept of willingness to pay for water (Becker, 2009). People’s demand for services
is shown in prices, as demand increases people’s WTP also increase and this consequently
improves the service delivery of a water utility.

2.5 Water pricing

While local authorities and service providers may see the need to charge cost effective prices,
central government may intervene and block such moves as a result of resident protests and
failing to understand the economic value of water and this normally results in water being
underpriced and poor urban water management.

The World Commission on Water (WCW) has estimated that to meet all water supply and
sanitation, irrigation, industrial and environmental water demands, investments in water
infrastructure needs to increase from the current level of $75 billion to $180billion a year (World
Water Vision, 2000:51). This enormous investment gap will demand innovative thinking and that
integrate approaches be met, while well-targeted subsidized public investments will still be
needed. The development and long-term sustainability of the necessary infrastructure will
certainly require the systematic adoption of integrated water resources management and
introduction of appropriate water pricing mechanisms. Without adequate pricing mechanisms,
consumers have no incentive to use water more efficiently as they receive no signal indicating its
relative value (ADB, 1997).

According to Interconsult (1985), water rates have three major functions; economic, financial
and social. Economic function is to ensure that scarce resources are allocated efficiently; the
financial function is to see that costs are covered by revenue and social function requires that
consumers are provided with their basic needs at a price which they can afford. Unfortunately no
policy can satisfy both economic and financial criteria. This is because economic criteria would
require different prices at every supply but the disadvantages of a uniform pricing policy are
considered to be outweighed by the advantages. Secondly, there is spare capacity; the low rate
demanded by the economic criterion would fail to meet the least ambitious financial criterion.
Hence either one criterion must be ignored or a compromise must be achieved.

Many experts seem to agree that poor access to water supply is often a result of poor policies and
management practices (Yan, 2003). However, there is significant disagreement over the
approach to addressing the problem. In direct opposition to lobbies demanding that water be
treated as a human right, experts at agencies such as the United Nations and the World Bank
argue that a first or crucial step toward improving the water situation and its management is to
treat water as an economic good (World Bank 2001). The Economist is even more emphatic and
specific, it concurs that water has been ill-governed, but argues that the problem above all, is that
it has been colossally underpriced.” It concludes that in meeting the ambitious water target of
halving the proportion of people without access to clean water, money will play a part. But
greater reliance on pricing and markets are even more crucial. Managing water as an economic
good is an important way of achieving efficient and equitable use, and of encouraging
conservation and protection of water resources. Economic factors play an increasing role in
water management. However, full appreciation of the value of water and more systematic water
pricing could substantially improve water management. Prices for water have increased
considerably in real terms over the past decade. This has been partially attributed to rising of
quality standards for water supply. On the other hand the supply of clean freshwater is becoming
more and more due to the increasing pollution and overexploitation of the water resources. Water
is now being transferred from further and further away because of scarcity.

According to Pearce (1990), water tariffs and charges convey a signal to water users on the
value of water. Incentives for water conservation are given by metering, volumetric charges,
increasing block-tariffs and a move towards Full Cost Recovery as these instruments lead to a
better reflection of marginal costs in water prices. Pearce and Turner further explain that water is
usually under-priced as it best covers the direct use value or the production costs which is far
below the marginal opportunity costs which include the production costs, the external costs and
foregone future benefits due to resource depletion. As water scarcity grows, prices tend to
accelerate due to higher production costs, rising external effects and if care is not taken rising
foregone benefits due to water mining. It is therefore important to estimate the optimal price of
water.
Determination of the optimal price is difficult (Howe, 1967) because of the absence of
competitive markets in water supply (Alarerts1998). Monopolies do not necessarily equate the
marginal cost of supply to the consumer’s willingness to pay and thus to ensure efficient water
use and affordable water, step or block tariffs are commonly used. Step tariffs encourage water
efficiency use, as the marginal price of water increases from the first to subsequent blocks
(Alarerts, 1999).

Affordability is the social aspect of water service provision that is most clearly and closely
linked to pricing policies. Affordability of water services may not be distributed equally across
income groups or neighborhoods as seen in the case of Dhaka in Bangladesh, a lower income
household will inevitably pay a higher proportion of their income for water services than a
higher income household does (Haq, 2006) and thus it is important to consider the social and
economic value of water.

2.6 Effects of water pricing on household water use practices

Ability and willingness of a household to pay for water depends of many factors among them
being the household income and quality of service delivered by the service provider. However in
Zimbabwe due to the poor service delivery by most water utilities across the country, water
shortages were prevalent and this led to many residents to reside to unsafe water source. This
consequently resulted in the cholera outbreaks which have taken place on an annual basis in
Zimbabwe since 1998. The situation worsened from August 2008 and as of May 2009, over
97,000 cases had been reported which had led to the death of more than 4,200 people
countrywide (UNICEF. 2009). The outbreaks are clearly linked to the lack of safe drinking water
and the inadequacy of sanitation due to lack of chemicals for everyday operation of water and
wastewater treatment plants and maintenance of facilities.

The above mentioned negative effects imply that if residents are not happy with the water price
and they fail to pay, chances are high that they resort to unsafe water sources resulting in an
increased burden of water related diseases and on the other hand some residents may protest and
this may result in other worse effects such as loss of lives.

2.7 Stakeholder involvement in urban water management

Most countries in southern Africa, such as Zimbabwe, South Africa, Malawi, Tanzania, Zambia
and Namibia, have embraced the philosophy of stakeholder participation in water resources
management (Manzungu, 2004). In order to show their commitment to stakeholder participation
in water management, South Africa, Malawi, Tanzania and Zimbabwe have already introduced
laws, which provide frameworks for the establishment of stakeholder water institutions
(Manzungu, 2004).

Stakeholder involvement is recognized as an important factor in the successful implementation

of water management plans, particularly when e orts are made to resolve competing and
conflicting demands in areas facing water scarcity (Gerasidi et al., 2009). Involving stakeholders
enables, first, a better understanding of di erent parties that have an interest in water management
problems; second, the process can articulate more clearly the context of agreements and
disagreements; and finally it can also significantly contribute to conflict management or conflict
resolution (Becker, 2009). In this regard, stakeholder involvement in water management
processes has been applied as a means of resolving water allocation conflicts for example in the
island of Paros, Greece. This Island faced a challenge of identifying solutions to the water
management issues in the island and ensuring urban water demand coverage taking into account
the high seasonal tourist influx, while at the same time securing an equitable water allocation for
all water users in order to avoid, manage or resolve existing and emerging conflicts. To achieve
this dual goal, the close collaboration among stakeholders and institutions active in the
management of water in the island was crucial towards promoting improved water governance,
valuing and equitable sharing of water resources (UNDP 2006). More important, however, the
process also revealed and identified common perceptions and points of convergence in support
of demand management options, socio-economic measures and institutional adaptations.
Through the di erent steps of the process, all stakeholders bridged di erences and came to a
consensus as a diverse group, advocating soft-path measures and reforms, encouraging public
participation in decision-making and contributing to integrated urban water management
planning (UNHABITAT, 2006).

Of late Integrated Water Resources Management (IWRM) has become the dominant paradigm in
the management of water resources (GWP, 2009). The third Dublin principle of IWRM is on
participation by all stakeholders (SIWI, 2005) in the management of water resources. What is the
rational for managing water with the involvement of stakeholders? IWRM combines interests,
priorities and disciplines as a multi-stakeholder planning and management process for natural
resources within the catchment ecosystem, centered on water. In southern Africa it has been
observed that participation has mainly been an issue in the farming sector because of the interest
which commercial farmers had in the sector (SIWI, 2005). Many studies on stakeholder
participation particularly in Zimbabwe have been done by authors such as Chikozho, Swatuk,

Kujinga, Mabiza and Manzungu in the 90‟s and the 20th century. However, in urban areas there
is still scope for analyzing how participation is taking place, and one such area which needs
inquiry is that of tariff setting.
2.8 Privatization of Urban Water Management

Only about 5% of the world‟s people (about 300million) receive their water from private
companies. Private companies are unlikely to be interested in providing water services in rural
areas in low-income countries because rural areas are generally considered unprofitable (UN,
2003). Privatization of water services has often led to increased tariffs largely unaffordable to
poor households. In the year 1995 the Philippines was declared a water crisis because the public
water utility had left 3.6million people unconnected to a water supply and in 1997 two private
water companies won concessions to take over Manila‟s water system. After five years the
companies had connected roughly 2 million more people to the network and service had
improved significantly but within these years, the private companies had operated below their
targets and thus by January 2003 water tariffs had risen by two to five times 1997 rates. By 2000,
residents’ survey in 100 districts revealed a mixed perception of privatization, with 33% of
respondents noticing better service, 55% noticing no change and 12% noticing deterioration
(Thompson, 2000).