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ESTE Affordability and willingness to pay

Affordability and willingness to pay


In order to determine affordable level of water tariff it is important to analyze the consumption pattern and house income of the family. Consumption pattern Both the connected and the non connected households were asked to respond on the question related to the volume of water consumed on the daily basis. As presented in table -----, of the total of non-connected household, 5.4 % consumed 1-10 litre, 8.8% consumed 10-20 litre, 53.8 % consumed 20-40 litre, 8.3 % consumed 40-60 litre, 12.1% consumed 60-80 litre, and 11.7 % consumed more than 80 litre of water per day per household. Similarly, of the total of connected households sampled, 6.1% consumed 1-10 litre, 9.1 % consumed 10-20 litre, 50 % consumed 20-40 litre, 6.1 % consumed 40-60 litre, 16.7% consumed 60-80 litre and 12.1% consumed more than 80 litre of water per day per household. The mean comparison test show that the absence of significant difference in terms of the average volume of water consumed per day between connected and non-connected households. Table --- : Volume of water consumed per day per household in liters Quantity ( liter ) Non- connected Connected Number 1-10 10-20 20-40 40-60 60-80 >80 Total Source: survey result, 2008. 13 21 129 20 29 28 240 Percent 5.4 8.8 53.8 8.3 12.1 11.7 100.0 Number 4 6 33 4 11 8 66 Percent 6.1 9.1 50.0 6.1 16.7 12.1 100.0

According to the sample survey the average per capital consumption in the town has been found to be 9.71 l/d, which is less than 20 l/d.

ESTE Affordability and willingness to pay

Households Income Level As it is observed from the household socioeconomic survey result (2008), the livelihood of the connected as well as the non-connected respondents were depend on various occupations but dominated by private trade. . In terms of the connected respondent occupation 27 % were government employee, 2% were agriculture, 6 % were daily laborer, 6 % were pension, and 44 % were traders. Similarly, occupation of the non-connected respondent show that 19 % were government employee, 4 % were agriculture, 28 % were daily laborer, 3 % were pension, and 44 % were traders. Although trade accounts the lion share in both of the cases, the level of trade varies from individuals to individuals. In the sample survey the minimum income of the house hold has been ETB 100 which constitute 17 % of the sample size. Summary of income of surveyed house are shown below.

Table ------Income Distribution of the town household Income Group (birr/month)


0-200 200-400 400-600 600-800 800-1000 1000-1200 1200-1400 >1400 Total

No. of HH in the group


52 92 66 49 23 8 8 15 313

% Cumulative Percent
17 29 21 16 7 3 3 5 100 17 46 67 83 90 93 95 100

Affordable Level

ESTE Affordability and willingness to pay


According to the household baseline survey, the mean household income of the surveyed households extracted from expenditure survey on Foods &drinks, clothing, electricity, drinking water, medication, lamp/gas oil, fire wood, agricultural inputs and other purposes is 538.78 Birr. Total monthly expenditure for connected households in the town varies from a minimum of birr 125 per month to a maximum of birr 2707 per month, with an average of birr 1038 per month. The total monthly expenditure for non-connected household in the town varies from a minimum of birr 57 per month to a maximum of birr 1611 per month, with an average of birr 405 per month. This shows that the average monthly expenditure of the non-connected household is less by 61 % relative to the connected household monthly expenditure. The connected and non connected household monthly expenditure for drinking water accounts on the average birr 16.18 and birr 8.27 per month per household respectively. That is the non connected households monthly expenditure for drinking water is lower by a bout 49% compared to the connected one. Table --: Average household monthly expenditure for connected and non connected households Expenditure item Connected Non-Connected Total N=66 N=246 N=312 Foods &drinks Clothing Electric Drinking water Medication Lamp/gas oil Fire wood Agricultural inputs Other purpose 6.00 Sum 1038.32 Source: Survey result, 2008 Birr/month 689.91 140.74 8.06 16.18 63.71 18.04 64.92 30.75 % Birr/month 66.44 293.03 13.55 26.28 0.78 3.79 1.56 8.27 6.14 14.04 1.74 13.54 6.25 31.91 2.96 1.94 0.58 100 12.50 405.30 % Birr/month 72.30 376.72 6.48 50.42 0.93 4.69 2.04 9.93 3.46 24.51 3.34 14.49 7.87 38.87 0.48 8.02 3.08 100 11.13 538.78 % 69.92 9.36 0.87 1.84 4.55 2.69 7.21 1.49 2.07 100

ESTE Affordability and willingness to pay


Only 10.5 % of the households earn less than Birr 200. More than 90 % Nigatu-group use of this water from public tap. Therefore, it is important that the tariff rate for public tap should This needs 3to be changed after not exceed the affordable rate of this group, which is around Birr 3.00 perclarification on that having m . The households with the average income of greater than Birr 800 can afford a tariff rate of Birr 7 if they consume not more than 5 m3 per month. The Master plan has also indicated that average affordable tariff in the towns is around 6 to 8 Birr per m3. However, it is also essential to examine the willingness to pay of consumers that will give more accurate picture of the economic reality than ability to pay. Willingness to pay for piped water supply is affected by a number of factors such as supplied quantity of water, reliability of supply, availability of alternative sources of water with acceptable quality and by awareness level of the users. According to the survey, all of households have agreed to pay higher tariffs if the quantity and quality of water improved. That is connected households are willing to pay birr 5.65 per metric cub of water for water tariff. In addition, the water tariff at standpipe can be served at the rate of birr 0.21 per jerry can (10.5 birr/m3), which is higher than the connected rate.

Proposed Tariff We have recommended using progressive tariff on FIVE-band system. It is based on the existing incremental band structure applied by the Office. Accordingly, the existing eight-band system adopted by the Office with the following range has been acceptable. 1st band 2nd band 3rd band 4th band 5th band 0.1 M 3- M 3/m M 3 M 3/m M 3 - M 3/m M 3 - M 3/m >M 3 M 3/m

ESTE Affordability and willingness to pay


After consider ring the financial requirement of the water service and delivering water supply to all section of the society the following tariff rate has been recommended. In order to have a smooth implementation of tariff changes, the increases have been made over years. However, the detail and differential tariff calculation across consumers categories are shown in Annex ---- and -----------.

ESTE Affordability and willingness to pay


ANNEX

Average volume of water consumed per day by connection type type of connection connected non-connected Total N 2 70 72 Minimum 30.00 30.00 30.00 Maximum 30.00 70.00 70.00 Mean 30.0000 30.5714 30.5556 Std. Deviation .00000 4.78091 4.71405

Average pcdwc /per capita daily water consumption Report adpcwc type of connection connected non-connected Total N 2 69 71 Minimum 4.29 3.75 3.75 Maximum 15.00 30.00 30.00 Mean 9.6429 9.7195 9.7173 Std. Deviation 7.57614 6.57332 6.54172

Monthly average expenditure for water charges by volume of water consumed daily basis

ESTE Affordability and willingness to pay

connec tion type connec ted

foods& drinks N Minim um Maxi mum Mean Std. Devia tion Media n 86.00 30.00 3000.0 0 578.20 445.19 450.00 204.00 0.00 2000.0 0 303.94 233.36 300.00 290.00 0.00 3000.0 0 385.27 335.10 300.00

clothing in 86.00 0.00 2000.0 0 194.20 291.50 100.00 204.00 0.00 600.00 58.04 101.57 25.00 290.00 0.00 2000.0 0 98.42 190.05 33.50

electri c in 86.00 0.00 800.00 57.14 94.03 30.00 204.00 0.00 400.00 25.33 40.72 12.00 290.00 0.00 800.00 34.76 63.06 15.00

drinkin g water 86.00 0.00 80.00 16.30 13.22 11.00 204.00 0.00 100.00 11.74 11.49 10.00 290.00 0.00 100.00 13.10 12.19 10.00

medic ation 86.00 0.00 500.00 26.29 62.24 17.30 204.00 0.00 500.00 28.32 66.52 8.30 290.00 0.00 500.00 27.71 65.18 8.50

lamp/g as 86.00 0.00 30.00 5.02 6.07 3.00 204.00 0.00 150.00 7.25 16.38 2.25 290.00 0.00 150.00 6.59 14.15 3.00

fire wood 86.00 0.00 1000.0 0 181.35 220.96 100.00 204.00 0.00 1000.0 0 161.42 174.03 92.50 290.00 0.00 1000.0 0 167.33 188.99 100.00

agrl. inputs in birr 86.00 0.00 0.00 0.00 0.00 0.00 204.00 0.00 650.00 22.35 86.88 0.00 290.00 0.00 650.00 15.72 73.53 0.00

averag e monthl y expen diture for other purpos e in birr 85.00 0.00 300.00 12.46 37.62 0.00 204.00 0.00 300.00 13.74 44.60 4.00 289.00 0.00 300.00 13.36 42.60 3.00

Sum of house holds monthl y expen diture 86.00 113.00 4252.0 0 1070.8 2 689.14 918.00 204.00 6.50 2992.0 0 632.13 405.35 568.25 290.00 6.50 4252.0 0 762.22 543.49 645.83

not connec ted

Total

N Minim um Maxi mum Mean Std. Devia tion Media n N Minim um Maxi mum Mean Std. Devia tion Media n

ESTE Affordability and willingness to pay

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