WoddDevrlopment, Vol. 22, No. 1, pp.

71-83,1994
Pergamon Copyright 0 1994 Pergamon Press Ltd
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0305-7501094 $6.00 + 0.00

Water Markets, Market Reform and the Urban Poor:

Results from Jakarta, Indonesia
RANDALL CRANE*
University of California, Irvine

Summary.
- Roughly 20% of the eight million persons ia Jakarta receive water from municipal water
counectiens to their homes. Remaining supplies are essentially private and include street vendors, staud-
pipes, and wells - the last of these an inexpensive but inueasingly contaminated source in many areas.
An expansion of the netwcrk of in-house connections is in progress, but will take several decades to
complete. In the interim, various strategies have been advanced to deal with persistent problems of
access to good water by the poor. This study examines the impacts of one such plan put to action, the
April 1990 deregulation measure permitting private homes with water connections to resell municipal
water. We present preliminary evidence that the primary social benefits of deregulation are the money
savings and increased consumption by former vendor and standpipe customers. In most respects the
aggregate effect is equivalent to a costless expansion in the standpipe system, with the difference on the
supply side that significant transfers from vendors and standpipe operators to household resellers may

1. INTRODUCTION pedlars who deliver water door-to-door and neigh-

Limited access by the poor to clean water is among
the most basic issues faced by authorities in the
cities of the developing world. This and related con-
cerns explain a good part of the billions of dollars
planned for urban water infrastructure investment
over the next few years. The funds are mainly
intended to improve water treatment capabilities and
expand the population served by in-house connec-
tions, but administrative and regulatory reforms are
also increasingly advocated as either cost-saving
strategies or equity-promoting measures, or both.*
The value of these efforts has been difficult to esti-
mate, however, owing to the limited availability of
data on actual water consumption patterns, especial-
ly in squatter settlements. Information regarding the
demand for water by the urban poor, including the
amount they pay, where they find it, and how they
would react to a change in either prices or supply
structures, remains relatively scarce. As a conse-
quence, the behavioral response to any given policy
intervention has only infrequently been incorporated
into infrastructure investment and administrative
reform plans.*
This paper addresses the gap by analyzing the
effect of a competition-enhancing market reform in
Jakarta, Indonesia. Most of the residents of Jakarta
do not have direct access to piped water and increas-
ingly find traditional low-cost sources, such as rivers
and wells, contaminated or depleted. In some parts
of the metropolitan area, people obtain most of their
water from alternative sources, including street
borhood standpipes. These supplies are somewhat
less healthy and dramatically more expensive than
water distributed through house connections. In
some locations, inadequate access to reliable and
low-cost sources of clean water has led consumption
to fall to health-threatening levels. An aggressive
standpipe investment program has reduced the dis-
tances between neighborhood taps over the past few
years, thus lowering water transport costs and pro-
moting competition among tap operators. As another
component of the effort to increase the number of
suppliers and thereby lower water costs to the urban
poor, the municipal water enterprise also permitted
all households with a metered connection to resell
water starting in April 1990.
This study provides preliminary evidence on the
market impacts of the deregulation measure after its
*I am grateful to Dr. Jun Hang, formerly of The World
Bank and now of the International Finance Corporation,
and to several senior staff of the Jakarta municipal water
enterprise, Perusahaan Air Minum Jaya, for comments,
access to data and other essential help. Gunnar Eskeland
and Emmanuel Jimenez provided valuable advice on the
design of the questionnaire. I also thank Marlon Boarnet,
Amrita Daniere, Eric Heikkila, and especially three anony-
mous referees for many suggested improvements to earlier
versions. The data for this study were obtained as part of a
project completed for The World Bank, but the views
expressed are mine alone and should not be attributed to
The World Bank, its management, or any of its member
countries. Final revision accepted: August 20,1993.

71
72 WORLD DEVRLOPMENT
first year. There are two objectives. The first is to
generate new information regarding the linkages
between water markets, market reform, and urban
poverty. While the results support the conventional
wisdom that market liberalization can only help con-
sumers, as well as increase aggregate efficiency,
they also underscore the pivotal role of private water
markets in the larger urban service distribution sys-
tem. Water is better described as a private market
commodity than a public service for millions of peo-
ple in Jakarta, and efforts to improve local circum-
stances must account for local market conditions to
be most effective.
The second aim of the study is to calculate the
consumption value of deregulation, as in a benefit-
cost assessment. Within the limits of the sampling
technique, the study considers the value of two cate-
gories of consumer benefits, which are labeled
direct and indirect. Direct benefits are defined as
those restricted to households choosing to buy from
the new water source, and are reflected in the time
and money saved over alternative supplies and the
value of increased consumption. The so-called indi-
rect benefits equal the money savings by current
vendor and standpipe customers owing to price
reductions induced by increased competition. The
latter category of benefits do not accrue to the con-
sumers of the deregulated water source, although
they are a direct consequence of the new policy. In
addition to these, the change in the welfare of sellers
is a third, unmeasured, category of potential benefits.
While sizable transfers from vendors and standpipe
operators to household resellers might well occur,
the primary social benefit of deregulation appears to
be the money savings and increased consumption by
former vendor and standpipe customers. Public sec-
tor resource costs are negligible, so the effect on
consumers is similar to that of a zero-cost expansion
in the standpipe system.
The next section provides context by reviewing
the highlights of the literature on urban water mar-
kets, and the structure of these markets in Jakarta.
The results of a household expenditure survey are
presented, including a description of water consump-
tion patterns in the sample. The paper then examines
the benefits of deregulation, as an element of future
water sector reform strategies. Finally, the conclud-
ing section offers some further thoughts on water
policy toward the poor in Jakarta.
2. URBAN WATER MARKETS
A number of studies have documented vending
and standpipe practices in developing countries.
Many have also analyzed the respective roles of pub-
lic policy and private markets in the overall water
distribution system. Most of this work has concen-
trated on strategies for improving the adequacy of
water supply in rural areas, where the greater num-
ber of poor live and where the share of the popula-
tion with reasonable access to good water is typically
much lower than in cities.3 This focus, reflected in
the rapid increases in rural infrastructure investment
throughout the past three decades, was also driven
by the argument that services to rural residents cordd
be brought to acceptable levels at a lower per capita
cost than in urban areas.
Somewhat less space has been devoted to the
study of water delivery systems servicing the urban
poor in recent years. While individual cities have
been examined in some detail for broad-based case
studies of poverty- and development-related issues,
systematic assessments of how urban water policies
affect vending and other water sources for the poor
are rare. Accelerated urban population growth over
the last 20 years, coupled with diminished access to
urban services in many instances, is sparking
renewed interest in urban water delivery issues, how-
ever. A benchmark for this literature is the compara-
tive survey of vending practices in Asia, Africa and
South America by Zaroff and Okun (1984). The
recurring themes in their data were the high relative
user cost of vended water, on both a per unit and
monthly basis, and its uneven quality due to poor
handling and source pollution. They nonetheless
conclude that vending is the most appropriate means
of delivering water in many instances, though most
vending systems could be improved through public
sector intervention. The latter would include equip-
ment upgrades, using house connections as vendor
suppliers, and route and price regulation to increase
water quality and lower its price. In a simulated
application to Surabaya, Indonesia, these policies
reduced the consumer price of vended water from
about $3.90 to $1.04 per cubic meters
Based on evidence from several locations,
Whittington, el al. (1989) argue that vending is often
sufficiently competitive to keep vendor profits below
rent-earning levels. In Whittington. Lauria and Mu
(1991). however, an analysis of the private water
supply for the city of Onitsha, Nigeria, illustrates
how sensitive this result is to market conditions.
Only 8,000 households in Onitsha. a city of 700,000,
have formal piped connections. The remainder
obtain most water horn a system of tanker trucks and
truck-supplied vendors. Trucks buy water at about
$0.20 per cubic meter, which they in turn sell at
$0.95 to $2.12 per cubic meter, at a markup of
roughly 50&1000%. Small vendors resell this water
at $2.7@-$7.90 per cubic meter, a further mark-up of
about 300% over their cost. The significant labor
costs of the latter group keep excess profits to a min-
imum. In the case of tanker trucks, however, sub-
stantial economic rents appear to be generated. The
authors were unable to provide a definitive explana-
 WATER MARKETS AND MARKET REFORM 13

tion the existence continued monopoly hibited from selling to their neighbors, for example.
ings by owners, although suspect that Berry and Sierra (1978) evaluated the extent of
truck owners enforce entry monopoly power by standpipe operators, and its
tions or the prospect a new Bank- implication for consumer pricing. They also calculat-
financed of the water system ed the distances between standpipes that would
lowered profit and thus retard excess profits while ensuring reasonable
In an study of Haiti, access by the poor. The main recommendation was
Fass presented the of a of an aggressive standpipe investment system to reduce
2,600 and vendors in 1975. existing distances accordingly.
water enterprise estimated its popu- Two lessons of critical importance to our study
lation 400,000 people, half reached in- emerge from this brief review. In many cities where
home and half 40 standpipes but access to good water is restricted, including Jakarta,
the determined the to be the private sector plays a central role by reselling
640,000 people, nearly 60% than thought. water obtained from private taps. In particular, indi-
the populations by connections rect access to public sector water may be more
standpipes were lower than important than direct access, especially among the
Approximately 435,000 used other, urban poor. The other lesson is that the consumer
rect, sources their water none of price of water depends on market structure, i.e. on
were accounted in official sector plans. the degree of competition among resellers. This is
two most sources were obtained influenced by both the regulatory environment and
at cost from with in-house private market characteristics. The next section
tions, used 15% of population, and updates water market data in Jakarta to 1991, follow-
water, purchased nearly 50%. water was ing more than a decade of considerable investment in
in three by 25 at $7.50 $15.00 both house connections and hydrant systems - and,
per meter, by households with connec- in 1990, the legalization of household resales.
tions at $2.50 to as high as $50.00 per cubic meter in
the dry season, and by 14,000 traditional water sell-
ers who bought their water from the second group 3. WATER MARKETS IN JAKARTA TODAY
and resold it at $1.50-.$2.75 per cubic meter. As the
author remarks, it thus became clear that water was In many respects, access by the poor to good
much less a public service than a large private indus- water in Jakarta has both improved and deteriorated
try, generating several million dollars in revenues over the past 15 years. As the commercial and
per year. The city water board earned less than one- administrative hub of the fourth most populous
fifth the amount people spent on vended water. country in the world, a disproportionate share of the
Notable consequences include (a) the transfer of nations population growth over the past three
wealth from poor consumers to the households sell- decades has fallen on metropolitan Jakarta. By 1990,
ing water from their homes, (b) the meager earnings 20% of the urban population of Indonesia, or over
of water carriers compared to sellers with piped con- eight million people, lived and worked in the city.
nections, and (c) the wildly uneven level of access to The surrounding fringe areas contained an additional
good water across income groups and neighbor- 8.4 million. The rapid urban growth and associated
hoods. industrialization in the metropolitan Jakarta area are
Fass observed that these patterns were not unique placing increasing stress on the natural resources of
to urban Haiti, and that indeed the situation in the region, with domestic and industrial wastes caus-
Jakarta, Indonesia, in the mid 1970s was similar in ing severe degradation of ground, surface and coastal
several respects. As shown in Berry and Sierra waters. Fully 40% of the population still depend on
(1978) and Berry (1982), a system of vendors and groundwater, but the quality of this source is already
private standpipes supplied as much as 10% of the poor in many areas and threatened in others.
city at $1.70~$2.10 per cubic meter in 1977. Incidence of infant mortality and of gastroenteric.
Vendors bought their supplies from private water pulmonary and viral diseases caused, in part, by pol-
connections at about $0.09 per cubic meter. These luted and congested conditions is high, especially
water connections differ somewhat from those in among the poor and those living in northern, flood-
urban Haiti by their official status and restrictions on prone areas of the city. Moreover, the ground water
competition. Classified as standpipes. or hydrants, table is saline from the coast to as far as five kilome-
their location and operator were selected by the ters inland, leaving well water all but useless at some
water authority. In addition, the prices charged were sites.
subject to controls. These controls appear to have The other main water source is the municipal
been largely ineffective, but entry into the market water authority (PAM Jaya). This is distributed by
was tightly regulated. Private households were pm- several means, the most direct, convenient and least
14 WORLD DEZVELOPMFNT
expensive of which are in-house connections.The
water enterprise listed 225,000 household water con-
nections in June 1991, or about 20% of the house-
holds in the service area, with expansion plans call-
ing for an additional 25,000 hi each of the next few
years. In the southern, central and eastern parts of
the city, those who lack official connections continue
to rely on well water for most purposes. Residents of
the northern and western areas, where groundwater
supplies are of especially poor quality, generally buy
their drinking and bathing water from either
hydrants, a kind of private standpipe. or street ven-
dors. The latter in turn obtain their supplies from
hydrants, which are connected by pipe to the munici-
pal distribution system.
Although somewhat public in origin, private indi-
viduals operate most hydrants as for-profit enter-
prises. The two main types are (a) Hidran (Imum.
the franchise for which was purchased outright by an
individual, and (b) Hidran Contoh, which are osten-
sibly free to the community and operated by an indi-
vidual awarded that privilege with the support of
neighborhood leaders. A third hydrant type is the
water terminal, or Terminal Air. These are freestand-
ing water tanks supplied by water trucks in remote
areas beyond the reach of the water mains. To pur-
chase hydrant water, a household must transport
buckets of water from the tap back to their home by
hand, or by cart rented from the hydrant operator. In
a few cases, Hidran Contoh use long hoses to deliver
water to each house so that no water need be carried.
The traditional Jakarta hydrant is the Hi&an Umum.
with 1,241 in use in May 1991. The number of
Hidran Contoh has risen dramatically in the past
four years due to au aggressive investment program
of the national planning ministry (BAPPENAS), and
there were 633 by May 1991. While the Hidran
Contoh are meant to be more community oriented
with respect to both location and operation, whatever
distinctions exist between the two hydrant types tend
to be immaterial to consumers in most instances.
Service quality differences from one hydrant to
another appear to depend far more on the pressure in
the distribution system at that location, and the size
of the hydrant reservoir, than how the hydrant was
financed or how the franchise was awarded. In par-
ticular, market forces largely determine selling
prices rather than official price guidelines.
A recent estimate by PAM Jaya of the number of
vendors servicing Jakarta is around 8,000. An exten-
sive housing survey conducted in 1988 indicated that
32% of the municipal population bought vended
water (Struyk. Hoffman and Katsura, 1990).
Vendors transport water in plastic or tin jerrycans.
varying in size from 18 to 100 liters each, by means
of single axle handcarts carrying four to 18 cans. To
sell water, the vendor hand-carries jerrycans to the
house from the street or alley and deposits the water
in the households barrel or reservoir. Customers buy
water by the cart or by the piRul (two cans). Vendors
in Jakarta commonly purchase their water from
hydrants, although the vendors are often employees
of the hydrant operators and work for a salary or at a
piece-rate. In other cases, the vendor may rent the
cart from a hydrant owner. Vendors tend to have reg-
ular routes, and other studies of Jakarta have report-
ed that vendors stray from their normal route only
when requested to do so by a consumer.
Lingering concerns remain over the market
power of both hydrant operators and vendors. In
1990 and 1991, the official consumer price of water
delivered by an in-house piped connection was 350
Indonesian Rupiah (Rp) for each of the first 15 cubic
meters per month (about $0.18 in mid-1991). An
escalating block tariff applies to larger quantities,
peaking at Rp 900 per cubic meter for amounts
above 50 cubic meters per month.9 In addition,
installation of the hook-up requires a fee of Rp
81,000. Each Hidran Umum and Hidran Contoh
operator paid Rp 150 per cubic meter for water from
PAM Jaya, at least in those cases where meters were
functioning correctly. The official selling price,
prominently displayed in every hydrant facility, was
Rp 500 per cubic meter in 1991. Actual selling
prices tend to be from Rp 1,000 to Rp 4,000 per
cubic meter, including the rental price of the cart.
The end-user price of vended water varies substan-
tially from one area to another, but can be as high as
Rp 7,000 per cubic meter, some 20 times the price
for connectedhomes. These vast differentials have
led to both equity and health concerns by water plan-
ners. While more hydrants are added each month,
some observers have expressed the concern that
hydrant competition is kept to a minimum by spac-
ing hydrants sufficiently far apart. The vendor sys-
tem is entirely private in nature, and unregulated.
Apart from price controls, already in place to some
extent for hydrants, the clearest means for improving
consumer welfare is to introduce more competition.
Lovei and Whittington (1993) and Shugart (1991)
have reexamined these arguments, based on new evi-
dence for Jakarta.lO In principle, the ability of
hydrants and vendors to earn excessive profits is lim-
ited only by the availability of close substitutes for
the services they offer, and in many areas these are
few indeed. Shugart (1991) provides an especially
clear picture of vending and hydrant practices in the
northern and western parts of the city, where these
markets are most active. He discusses how limited
competition among vendors and the spatial pattern of
hydrants interact, and suggests that the degree of
competition among vendors varies by neighborhood
- depending on. among other things, whether com-
peting vendors are members of the same ethnic
group or have migrated from the same village.rl
Hydrants are another story, with the extent of price
 WATER MARKET.5 AND MARKET REFORM
competition depending almost entirely on the dis-
tances involved. Lovei and Whittington (1993)
emphasize the potential for sizable rent earnings by
both vendors and hydrant operators, and conclude
that existing arrangements result in too few water
taps, and too many resources hauling water by cart
They argue that deregulation of water sales coupled
with the easing of supply constraints could substan-
tially lower both hauling costs and water prices, and
thus reduce the ability of utility staff and neighbor-
hood officials to capture rents.
The municipal water authority implemented
policy with precisely this intent in mid-1990: The
legalization of the resale of water from household
connections. The remainder of the paper presents
data on its effect and the corresponding implications
for water sector policy in the metropolitan area.
4. A WATER EXPENDITURE SURVEY FOR
NORTH JAKARTA
To encourage a stable and competitive water sup
ply for low-income families, the municipal water
enterprise announced in April 1990 that all house-
holds with a metered connection would be permitted
to sell water to their neighbors and to vendorsi
prohibition on this practice was strictly enforced up
to that time. To assess the impacts of supply deregu-
lation, a household expenditure survey was adminis-
tered in Jakarta in mid-1991. A complementary pur-
pose was to collect generic information on water
consumption by low income households, including
the sources used, the quantities bought and prices
paid. Due to time and funding constraints, the study
confined itself to the area of Jakarta with the worst
ground water conditions: North Jakarta, a jurisdic-
tion covering roughly 155 square kilometers, or 23%
of the citys total land area, and home to just over
one million people in 1989. Water availability is a
particularly serious problem in this area and both
vending and public hydrants are relatively wide-
spread. It is also the area where the largest concen-
tration of houses reselling water is located.
Extensive interviews were conducted in July and
August 1991 with 291 residents. The sampling pro-
cedure resembled a modified cluster approach,
although severe constraints on time and resources
made proper sampling techniques somewhat imprac-
tical. Address listings were unavailable for the
neighborhoods of interest, for example. Low-income
areas were chosen through site visits and identified
on street maps, and we interviewed clusters of at
least 30 households in each of the major subjurisdic-
tions (kelurahan) of North Jakarta. Fewer than two
weeks were available for the sample selection and
data collection phases of the study, and as with other
rapid appraisal type studies in developing coun-
75
tries, every attempt was made to collect data as rep
resentative and thus useful as time and funds
allowed. Although our results are consistent with
other household data collected from North Jakarta in
recent years, caution should be exercised when gen-
eralizing the results beyond the sample.
The median monthly expenses of the sample
households are just over Rp 250,000.r3 While the
sample households are quite poor and live in areas
lacking most public services, 48% own their homes
and half have lived in their current home at least five
a years. The 291 sample households averaged 5.5
people per household, and represent a total of 1,341
people altogether. Table 1 summarizes water con-
sumption behavior for the sample. These descriptive
data are revealing of both fundamental trends as well
as the impacts of the market reform. Over 73% of
the sample households report buying water from
water vendors, 27.5% from public hydrants, and
10.0% from household resellers; i.e. neighbors with
in-house connections.*4 Some 13.4% of the sample
obtained water from the PAM Jaya piped system.
About 12% of these reported reselling water to their
neighbors. The number of families buying some
water from neighbors is approximately one.-third that
buying water from hydrants, and one-sixth the num-
A ber buying water from vendors.
Not surprisingly, the average volume of water
consumed is greatest for those households with
water connections. Sample households with connec-
tions report buying nearly 62.2 liters per person each
day. The second highest volume is for resold water,
at 26.7 liters per person each day. The average
amount purchased from hydrants is virtually the
same. Vendor customers purchase much less than
those of other suppliers, an average of only 14.6
liters per day per person. For North Jakarta overall
this behavior is consistent with the reported cost of
water, which is highest for vendor-supplied water, at
Rp 5.040 per cubic meter. This is over I4 rimes the
average cost of PAM Jaya water through a piped
water connection. A larger share of vended water is
reserved for drinking and cooking than for the other
sources. however. Water from hydrants is the next
most expensive after vended water, at about seven
times the piped water cost. Water resold by house-
holds is only slightly less than hydrant water, at Rp
2.090 per cubic meter.
Sample households report the largest expenditure
share for vended water (7.5%). slightly less for
hydrant water (4.8%), and less still for resold water
(3.2%). Families rarely depend on resold water as
their sole source, however, so this last term underes-
timates the average water cost for those households.
The smallest budget share is for piped water (1.8%).
Because piped water is considerably more inexpen-
sive on a per unit basis, low-income households with
connections choose to consume three to four times
16 WORLD DEVELOPMENT

Table 1. Water cauumption profie (Sample

means,exceptwhen?n&-d)

Household
Vendor Hydrant resales connected
customers customers hOU&OldS

Number of households 214 29 38

Percentage of sample* 13.5% 10.0% 13.4%
Cubic meters per month 2.4 8.5 5.7 13.2
Liters per day per person 14.6 25.9 26.7 62.2
Price per cubic meter Rp 2,430
$267 ($1.26) ?ZOY %OY;;
Minutes per week obtaining water lb 83 87 -
Meters to nearest hydrant 131 60 104 -
Meters to house connection 91 42 20 -
Meters to household reseller 113 9-I
Monthly household water cost Rp 13,590 Rp9,468 Rpy521 Rp4,854
($7.06) ($4.92) ($4.b5) ($2.52)
Monthly water cost per person Rp2,2io Rp 1,663 Rp 1,629 & 650
Share of household budget for water 7.5% 4.8% 3.2% 1.8%
Median monthly expenditures Rp 232,500 Rp 295,ooo Rp 260,m Rp335,OOO

YThe sample shares in the first four columns add up to more than 100% as 17% of the surveyed households purchased
from moTe than one source.
Source: The source for the data in all the tables of this paper is the household survey administered by the author and
described in the text.

the volume of water consumed by vendor and
hydrant customers. Median monthly expenses were
highest for co~ected households, at about $174. and
next highest for those buying hydrant water.
Households purchasing neighbor supplied water
were next lowest and, significantly, the lowest medi-
an monthly expenses were those of households buy-
ing vended water, at about $135.
To measure the sensitivity of consumption
household and market variables, particularly prices
and water transport requirements, a simple behav-
ioral model of water demand was estimated for the
households buying water from vendors or from
hydrants. (See the Appendix.) Table Al in the
Appendix shows that the demand for vended water is
significantly influenced in our sample by the Price of
water, the time per purchase, and the capacity of the
home water reservoir, all with the expected signs.ls
The point estimate of the price elasticity of water
demand is -0.48, which is consistent with the esti-
mates reported in other studies of water demand in
developing countries. I6 The interpretation of this
measure is that a 1% increase in the price per cubic
meter will, on average, reduce the quantity bought
by 0.48%. Controlling for differences in income,
family size, and other family and community charac-
teristics, the demand for vended water is thus moder-
ately responsive to price variation. Purchases will
fall if prices rise, and will increase if prices fall, all
things considered. The expenditure elasticity of
demand is estimated to be highly inelastic, at 0.03,
but not significantly different from either zero or
one. There may not be enough income variation in
the survey, controlling for all other factors, to
demonstrate a separate role for household resources.
It may also be that expenditures are a poor or biased
meaSure of income, or not as complete a measure of
the resources available to the household as would be
useful.
As shown in Table A2 in the Appendix, the price
elasticity for hydrant water is estimated to be -0.60,
to in roughly the same range as that for vended water.
In this case, the time per purchase and the capacity
of the storage tank are not significant. This is cer-
tainly not what we would expect of the time variable,
where the effort and time necessary to collect
hydrant water is substantially above that necessary
for vended water. Again, there may be a problem in
the way the variable was measured. It will be useful,
for example, to account for who it is that usually col-
lects the water. A childs time may have relatively
little value, while an adults time has higher opportu-
nity costs. The absence of an effect of reservoir
capacity is less surprising, given the likelihood that
less water can be carried per trip than can be stored
at the home.
5. THE VALUE OF DEREGULATION
This paper considers two categories of consumer
impacts of the change in regulatory policy, which we
call direct and indirect for convenience. Direct
impacts refer to those realized by new household
water customers, including both vendors and direct
purchases by other households. Ibe last of these is
 WATER MARKEXS AND MARKET REFORM 77

measured by calculating the savings in water expens- Table 2. Proportion of sample using sach water sowce in
es and time for customers buying resold water. July 1991, and the change in each proportion over the
Indirect impacts include the effects of increased pmolu year
competition on prices charged by other suppliers,
and are reflected in price reductions to customers of Use fa driakiag Use fa bathing and
sadcockiag cleaaing
both hydrants and vendors. Without good longitudi-
nal data, it is difficult to attribute changes iu end-
user water prices to any one factor such as the intro- Dry
seuml* g &?a L$
duction of new supply structures. Even where prices
Vendor 61.0% 5.4% 47.3% 5.3%
rise or remain stable, new supplies and other compe- Hydrsat 26.4% 0 15.8% -1.9%
tition-enhancing reforms may well keep downward Househdd $pe 11.0% 19.6% 9.6% 7.9%
pressure on prices. Gur survey, based on the memo- Househddrcade 1.7% 21.4% 2.7% 12.5%
ries of the respondents, indicates steady prices over Neighborwell - - 0.7% 0
the first year of the new policy. This is consistent Own well 4.8% 12.7% 32.3% -0.9%
with the interviews with vendors and hydrant opera- RiVCl

tors by Shugart (1991). who attributes the flat prices
to expansions in the hydrant system. While con-
sumers obtaining water exclusively from either
hydrants or vendors have not benefited directly from
household resales, the indirect benefits of entry by
new suppliers are thus tangible. Whether new sup-
plies are in the form of private households with con-
nections, community controlled hydrants, or some
other fixed location source would not appear to mat-
ter in this respect. The impact of this competition is
difficult to estimate given the available data, but pre-
liminary field visits suggest it is relatively minimal.
The potentially sizable transfers among water
suppliers are another matter, and represent a third
category of impacts. To the extent household
resellers capture market share from both vendors and
hydrants, they will gain and the last two will lose. In
some areas, household resellers have clearly cap-
tured a share of the revenues formally going to ven-
dors - who, on average, may be poorer that the new
resellers. Diminished market share for vendors is
most likely unavoidable, in any case. These gains
and losses am difficult to calculate in our case, how-
ever, as we have very few observations on water
resellers. The issue is probably whether consumption
benefits outweigh whatever negative impacts these
transfers may have, and this is largely answered by
the willingness of consumers to change suppliers.
The discussion below thus emphasizes direct con-
sumption benefits.
Based on the sample data, there do appear to have
been such benefits. In comparing sources from one
year to the next, and for drinking and cooking versus
bathing and cleaning. Table 2 shows that while ven-
dors provide most of the respondent drinking and
cooking water needs, the largest proportional growth
has been in rainwater and water resold by house-
holds. The households represented in this sample
used vendors and piped water (from new connec-
tions) more in mid-1991 than one year earlier, well
water somewhat less, and hydrant and household
supplied water about the same. One might have
expected to see a larger gain from hydrant use, and
RlillW~ <.3% 57.1% 1:::: -1:.6%
~numbersdduptomorcthrn1oO%rrmanyofthc
surveyed householdspurchasefrom moccthan one same.
from household resales, given the recent expansion
of the system but in many areas hydrants primarily
serve vendors.
At the same time, resales appear to play a supple-
mental rather than primary supply role. Few house-
holds buy water exclusively from neighbors, for
example. Moreover, in areas where household con-
nections are scarce, alleyways are narrow, and
hydrants relatively plentiful, there was little evidence
of household resales. Put another way, the impacts of
water sales deregulation are not geographically uni-
form. Spatial access to sources supplying water
which must be transported by households appear to
be a factor. One would expect that the purchase of
resold water is a decreasing function of distance to
both reselling households and the potential suppliers
represented by households with piped connections.
For families living over 100 meters from any house.
with a municipal connection, for example, only 1.4%
bought water from neighbors with connections. Ihe
number buying from households, however, rose to
over 19% among all households within 50 meters of
a house connection. Moreover, 43% of the house-
holds living within 50 meters of a household who
sold water in turn bought some resold water (Figure
1). The spatial competition represented by the degree
of access to hydrants may also be important, as the
share of households buying water from neighbors
falls with proximity to hydrants. The latter relation-
ship does not hold up in the regression analysis
reported in the Appendix, where distance to the near-
est hydrant helps explain neither the consumption of
vended or hydrant water, but it would be worth
exploring carefully in future work.
The household value of these changes can be esti-
mated, at least approximately, to obtain a quantita-
tive measure of the consumer benefits of deregula-
tion. Generally speaking, we are interested in the
78 WORLD DEVELOPMENT
q Vended water n Hydrant water
Figure 1. Percenrage of sample by source and by aWmce of potential sources.
size of these benefits, in the equity of their diatribu-
tion. and how they compare with any associated sup
plier costs. Again, however, the last two of these are
difficult to pin down with any real accuracy given
the nature of our data. We therefore concentrate on
the first.
As defined in this study, the direct benefits of
water sales deregulation come in two forms: the
money and time savings from a change in suppliers,
and the additional benefits of increased consump-
tion. These must be positive overall, or the house-
hold would not have changed suppliers. but it is use-
ful to examine how the various components com-
pare. If a household had been consuming 100 liters
per day of vended water at Rp 5 per liter, for exam-
ple, and switched to resold water at Rp 2 per liter,
the most obvious savings is the difference in the cost
of 100 liters, or Rp 300 per day. That is the out-of-
pocket savings. There may also be a time savings,
reflecting the difference in the time and effort cost of
obtaining water. A switch from vended to resold
water would probably involve increased time, so this
would enter the benefit side negatively. If the house-
hold had previously spent ten minutes per day
obtaining water, and now must spend 30 minutes per
day at that task, the net cost of the change is the
money value of the additional 20 minutes. This in
turn depends on which person in the household
obtains the water, and the opportunity value of their
time in other activities. If that person values that
time at Rp 300 per hour, for example, the additional
time required to obtain resold water effectively costs
the household Rp 100 per day.
There is also the additional direct benefit repre-
Hydrant
q Resold water
sented by any associated increase in water use, and
by extension the health and other indirect benefits of
increased consumption. It is likely that the household
will choose to buy more than 100 liters per day now
that a lower cost alternative is available. Say the
household increased its consumption to 120 liters,
for example. While the family must pay Rp 2 x 20
liters = Rp 40 per day for this water, it is also gener-
ally true that the household would be willing to pay
even more. Thii surplus* can be considered a mea-
sure of how much better off the household is by pur-
chasing more water than before, at a cost below what
it is worth to them.* The conventional approxima-
tion of the household value of this surplus is just half
the increased consumption times the change in price;
i.e. (20 liters x Rp 3)/2 = Rp 30 in our example.
Thus, a measure of the total direct benefits gained by
this hypothetical family per day is Rp 300 money
savings, less Rp 100 time cost, plus Rp 30 con-
sumers surplus, or Rp 230.
The fast step in this procedure is straightforward
and can be estimated from observed data; i.e. the
average price paid by source, and the average quan-
tity consumed. The second step is more problematic,
as it requires an accurate accounting of the time
devoted to water collection and the value of that
time.rg The third step, the calculation of the con-
sumers surplus gained by changing suppliers,
involves estimating the expected change in water
use. We do not have data on this change, but we can
approximate it by using the estimated elasticities of
demand from the previous section to calculate how
consumption will increase with a change in sup-
pliers. The price elasticity of demand is a measure of
 WATER MARKIXS AND MARKET REFORM
Table 3. Welfare gains by customers of household ru&rs
vahe of price difference
Switched from Switched from
vended supplies hydraat supplies
Per cubic meter Rp 3,020 Rp440
Per month per
family Rp 8,070 Rp 2,470
the propensity to vary water coosumptioo as the
price of water varies. 10 the Appendix, we estimate
that hydrant customers have a price elasticity of
-0.60, which implies that if prices fell by 18%. the
quantity of water purchased would rise by 60% of
that amount, or roughly 11%. Table 3 summarixes
these calculations for the hypothetical situation of
the average household facing average prices.
When a household changes suppliers, the calcula-
tion of consumption effects must also account for the
change in the time-cost of waiting for and transport-
ing water. While the average price reduction in
going from vended to resold water is 60%. from
Table 1, the household time devoted to bringing
water into the house will increase - the real savings
of switching from a vendor is therefore not so great
as it might appear from the financial accounting.
This component of the cost of water depends both on
the time spent transporting resold water and the
value of that time, which in turn depends on the
alternative uses of the time of the person collecting
the water. As in the price savings, there are two wel-
fare effects: the value of the time savings 00 the ini-
tial quantity bought, and the value of increased coo-
sumptioo attributable to the time difference.
These time savings gained by new customers of
household resellers can also be illustrated, though
without any statistical measure of accuracy. prom
Table 1, the average monthly difference in time
spent buying water from resold water versus vended
water is about 4.5 hours per month. The average
number of purchases per week was five. We can then
calculate an estimate of the increased time required
per purchase when switching from vended to resold
supplies of 15 minutes. This will reduce coosump-
tioo, holding all other factors constant, about 30
liters per month on average. The value of that
decrease depends on the value of time in this use.
The time savings of a switch from hydrant to resold
supplies depends most directly on the relative prox-
imity of the two supply sources. There may also be.
differences in waiting times in the queue. Table A2
provides no evidence. however, of a significant rela-
tionship between the demand for hydrant water and
the time required to purchase and transport that
water. This counter-intuitive result may be due to the
form of the data, the specification of the regression
79
equation. or other features of the local water market
the model does not capture.
00 the surface, the effect of deregulation on
prices paid and quantities consumed by low-income
families thus appear both positive and significant.
Many households have benefited from the availabili-
ty of closer and in some cases less expensive water.
Customers who have switched to resold water from
vended water now face a lower unit price and no
doubt increased their water consumption significant-
ly as a result. Those who switched from hydrant
water have realized less of a price decrease, on aver-
age, but in many instances likely gained some sav-
ings in time and effort costs associated with water
transport The public costs of the new regulatory pol-
icy appear miniial. The effect of the new policy is
thus equivalent to an inexpensive expansion in the
standpipe system.
6. CONCLUDING REMARKS AND
CONSIDERATIONS
On balance, it is difficult to argue with a policy
stimulating competition for an essential commodity
where, in addition, the poor are burdened by prices
well above those faced by others. In the case at hand,
the costs of market deregulation are almost exclu-
sively the rents lost by suppliers facing a diminished
market share. These may or may not be a social coo-
cem. The direct benefits of the legalization measure
are reflected in prices below the market prices of
other suppliers, in the additional consumption the
lower prices permit, and in the reduced time neces-
sary to transport resold water versus standpipe water.
In our sample, consumer benefits are about 59% of
the average household water bii for ex-vendor coo-
sumers (less additional time costs), and about 26%
of the average water bill for ex-hydrant consumers
(plus any time savings). Vendors buying water from
household resellers pay more than from their normal
suppliers (standpipes), but do so to avoid waiting
time in the queue and to reduce transport distance.
The indirect benefits of deregulation, in the form
of increased supply competition. are likely minimal
in the short mo and are difficult to measure with our
data in any case. The overall extent of reselling is
limited, for example, by the comparatively high sup
ply costs of household resellers due to rising block
tariffs, and the reality that water which must be
transported by the customer is not a perfect substi-
tute for water delivered into the house. The latter
characteristic also limits the value of an expanded
standpipe system. Indeed, neither household resales
nor the hydrant program are long-term substitutes for
an expanded piped water system. These policies
have eased supply problems for vendors and house-
holds alike in the interim but, especially considering
 80 WORLD DEVELOPMENT
the value of time and effort, the consumer cost of
water is substantially higher in either instance.
Until connections become more widespread, a ment would still sum to less than the average vendor
fundamental characteristic of the water sector in the
areas of Jakarta with poor groundwater is that it is
essentially private. Thus, public policies attempting
to work within the framework of supply and demand
at least avoid many of the unintended consequences
of those which do not. Other obstacles remain, how-
ever. One of the more serious problems limiting the
effectiveness of the deregulation is the widespread
ignorance of the legality of resales. Among those
families who were aware such sales are legal, over
28% bought some resold water. The purchase rate
was below 7% for households who did not know,
which may be partly explained by households who
were told it was legal but were not sure. We would
expect increased demand for resold water if village
and other community leaders become more involved
in promoting the legality and availability of sales
from household connections. These efforts might
take the form of neighborhood meetings, neighbor-
hood directories, and even community facilities to
encourage the practice of sales from house connec-
tions. This form of community participation will
ensure that families have community support for the
practice of buying from their neighbors, and that the
activity is clearly legal. It will also improve the qual-
ity of information regarding sources of water, and
thereby of prices paid.
Surprisingly perhaps, not all households who
have the opportunity to connect do so, even when it
would save them money over time - as it would in
most of the examples given here. The obstacle is
partly the connection fee of Rp 81,000 (S42), which
is a large lump sum payment for highly marginalixed
families. Credit schemes exist that, on paper at least,
should all but eliminate this burden. PAM Jaya
allows the fee to be paid directly to them in three
installments. The municipal bank offers a 12-month
financing plan, requiring monthly payments of Rp
7,000 or so. From Table 1, the average vendor cus-
tomer could increase his familys water consumption
NOTES
1. See, e.g., Munashinghe (1990), Okun and Lauria
(1991) and the overviews by The World Bank (1992) aad
The World Bank Water Demand Research Team (1993).
2. The value of such infamation is d&ussed in some
detail by Whittington and Choe (1992). which contains a
systematic review of the literature on the vahration of non-
health benefits of water sector improvements.
3. E.g., Saunders and Warford (1976), Briscoe and
deFerranti (1988), Whittington, e? al. (1989). Briscoe, et al.
five-fold after obtaining a connection, and the
monthly cost of the water and the connection install-
bill. Hydrant customers face similar savings. The
credit plans are little used, however. These calcula-
tions also ignore both the Unofficial fees one must
pay in many instances to facilitate the connection
process and the necessary improvements to the inte-
rior of the structure, for which no formal installment
plans are available. In addition, several households
mentioned the difficulties associated with budgeting
water expenses on a monthly rather than a daily
basis. The policy implication is that fmancing a lump
sum water investment is a complicated matter for the
poor, and simply having credit available is inade-
quate to the task. Alternative strategies should be
explored, including folding the connection fee into
the water bill somehow and considering more flexi-
ble-meaning more frequent-payment plans. The
financial constraints keeping households from
obtaining piped connections that lower their costs,
and increasing their water use. should be studied
further.
A fmal caveat: While the importance of account-
ing for private market activity in water sector plan-
ning is an unmistakable implication of this work,
care should be taken when generalizing beyond the
sample. The low-income areas of this city and others
differ markedly in their physical and economic cir-
cumstances, including the pressure available in the
piped water system, the land tenure of residents, the
level of organization among vendors, the size of
water cans vendors use, the way hydrants distribute
water, the extent of in-house water connections, and
the size of the alleys and pathways between homes.
The basic lessons of market reform no doubt apply
equally well to other cities in other countries, but the
magnitude, character, and distribution of change will
depend on local market structure. Future research
should review and assess the particular circum-
stances of each area before advocating one kind of
reform over another.
(1990). Wood and Palmer-Jones (1990), Okun (1991),
Whittiagtoa, Lauria aad Mu (1991), and The World Bank
Water Demsnd Research Team (1993).
4. Recent examples include Linn (1983) and Rasarda
and Parnell (1993) on large cities, Schteingart (1989) on
Latin Amesice, and Marcussen (1990) and Jelhnek (1991)
on Jakarta. Exceptions include Trava Manxanilla, R.
Calleros and B. Rodriguez (1991) for border cities in
Mexico, Fass (1988) for Haiti, as discussed below, and
Hardoy, Cairncross and Satterthwaite (1990).
 WATER MARKETS AND MARKBTREFGRM
5. All dollar figures have been expressed in constant
1991 US$ terms, using the Consumer Price Index.
6. Buro Pusat Statistik (1990).
7. Yayasan Dian Desa (1990) and Shugart (1991).
8. The exchange rate in July 1991 was approximately
1,925 Rupiah to each US dollar. The rate structure was
revised upward in late 1991.
9. The intent of an increasing block tariff is to both
encourage conservation and provide a cross-subsidy to low-
consumption users. It also severely restricts the role private
homes can play as indirect suppliers of water to the pocr,
however, as the marginal supply price of water will rise
significantly above that of other supplies with the amcunt
sold. In this case, purchasers of household supplied water
would cross-subsidize connected households that do not
sell water, which in most situations are wealthier.
Whittington (1992) discusses these issues in detail.
10. A case study of the Nortb Jakarta hydrant develop
ment program in late 1989 by Yayasan Dian Desa (1990)
also addressed many of these issues.
11. The average monthly net revenue of North Jakarta
vendors in the survey results of Crane (1992) was Rp
230,000 in 1991, less any cart rental costs. lhis represents
an average hourly wage of Rp 900 for the sample, which
Lovei and Whittington (1993) indicate is two to three times
the relevant average wage.
12. PAM Jaya Director General Announcement
030/INSTRIPAM/IV/l990, April 21990.
13. The questionnaire requested expenditure data on indi-
vidual categories of goods (e.g., food, electricity, housing,)
and the monthly total, which allowed for cross-checking
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Berry, Brian J. L., and Katherine Sierra, Public works
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81
and some curection. l&se data are considered somewhat
more reliable than the coIleded income data for that reason,
which in any event were not reported for nearly one-third
of the sample.
14. Hydrants, vendors and co~ected households are all
potential resellers of water. For clarity, we will tend to
refer to connected households that resell as household
resellers.
15. The decisioltmaking unit is the household, and the
demand equations are thus estimated at the household level
rather than on a per-person basis. Household sixe is includ-
ed as a control variable. Still, the composition of the family
clearly matters, with respect to both the demands for water
by people of different ages and the availability of person at
different ages to collect water. Alternative specifications of
the family configuration did not significantly affect the
price and time coefficients, however.
16. See the studies cited by Briscoe, et al. (1990), Bahl
and Linn (1992), and Whittington and Choe (1992).
17. The survey took place during the dry season.
Respondents were also asked about their consumption by
scurce during the rainy season, during which time the pro-
portion of households using rain water for drinking and
cooking was about 10 times higher and the proportion
using rain water for bathing wss about twice as high, on
average, as during the dry season. Use of the other scurces
did not vary much from one season to another.
18. Pindyck and Rubinfeld (1992) contains a basic dis-
cussion of this apl~oach to the measurement of consumer
welfare.
19. Whittington. Mu and Roche (1990) is a recent exam-
ple of an effort to calculate the value of time devoted to
water collection.
EenkEccnomic Review4 (1990), pp. 115-134.
Briscoe, John P., and Daniel deFerranti, Waterfor Ruml
conrnrwliti~: Helping People Help Themselves
(Washington, DC: The World Bank, 1988).
Buro Pusat Statist& (Indonesian Central Bureau of Statistics)
Jakarta D&m Angka(Jakarta, Indonesia: 1990).
Crane, Randall, lhe impact of water supply deregulation in
Jakarta, Indonesia: Results from household and water ven-
dor surveys in North Jakarta, Final Report, Infrastructure
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Fass, Simon M., Politkal Economy in Haiti: the Drama of
Survival (New Brunswick, NJ: Transaction Books, 1988).
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willingness to pay for social savices in developing coun-
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Hardoy, Jorge E., Sandy Cairncross and David
Sattherthwaite (Eds.), lke Poor Die Young: Housing and
Health in i%ird World Countries (London: Earthscan
Ress, 1990).
 82 WORLD DE7IELOFWENT
Jellinek, Lea, The Wheel ofFortune: The History #a Poor
Community in Jaharka (Honolulu: University of Hawaii
Press, 1991).
Kasarda, John D., and Allan M. Pamell (Eds.), Third World
Cities: Problems, Policies and Prospects (Newbury Park,
CA: Sage Publications, 1993).
L.inn, Johannes, Cities in the Developing World (New Yak:
Oxford University Press, 1983).
Lovei, Lasxlo, and Dale Whittington, Rent-extracting
behavia by multiple agents in the provision of municipal
water supply: A-study of Jakarta, Indonesia, W&r
Resources Research 29 (July 1993). w. 1965-1974.
Marcussen, Lars, i7rird WorldHousing~~ Social and Qnztial
Development: The Case of Jakarta (Aldershot, UK:
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Mu, Kinming, Dale Whittington and John Briscoe,
Modeling village water demand behavior: A discrete
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developing countries, Natural Resources Forum
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developing world, Environment 33, No. 8, (October
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APPENDIX: THE DETERMINANTS OF HYDR ANT AND VENDOR SUPPLIED WATER USE
To measure the sensitivity of consumption to household
and market variables, particularly prices and water trans-
port requirements, a simple behavioral model of water
demand was employed. The general specification has the
form:
log q@= $ + 6,log pe + s, log y,+ l3&+ B& gszj + Q.
where qti is the quantity of water purchased from source i
by household j, pu is the per unit price of water from source
i faced by household j, yj is the income of household j, rt+is
the time spent per week on collecting water from source i,
dp is the distance to source i, 4 is a vector of household and
community characteristics expected to influence demand,
and E is the errot term capturing data reporting and other
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Katsura, The Ma&r for Shelter in Indonesian Cities
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Komulta.n, 1990).
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RodrIguex, Manejo AmbiuatuJmente Adecuack de1 Agua
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Actuul y Pempectivus (Tijuana, Mexico: El Colegio de la
Frontera Norm, 1991).
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Whittington, Dale, and Kyeongac Choe, Economic benefits
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supplies, WASH Technical Report No. 77 (1992).
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Onitsha, Nine& WoridDevelomnent. Vol. 19. No. 2l3
(1991),pp. i79-i98. - .
Whittington, Dale, Kinming Mu, and R. Roche, Calculating
the value of time spent collecting water: Some estimates
for Uktmda, Kenya, World Development, Vol. 18, No. 2
@?bNWJ lgi)cl), pp. 269-280.
Whiaington, Dale, Donald T. Lauria, Daniel A. Okun and
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Wood, Geoffrey D., and Richard Palmer-Jones, The Water
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errors. (Crane (1992) discusses related estimation and spec-
iflcation issues applied to this model and these data.) The
Bs are the parameters to be c&nated. Of psrt.ia~lar interest
are 6, and & which may be interpreted as the price and
income elasticities of demand, respectively. This model
was edmated by ordinary least squares methods separately
for customers of vended water and of hydrant water, and
the results sre reported in Tables Al and A2.
Note that several statistical issues are left unresolved in
this approach. It would be useful to include the price of
water from other sources in the estimated equation, but
these are not available except in those relatively few cases
where households purchase from more than one source. We
do not observe the vendor price available to a household
who chooses not to buy vended water, for example.
 WATER MARKEZS AND MARRET REFGRM 83

Table Al. DeterminrmtJ

ofvoldcdwater use Table A2. Detenninmrtsof hydrantwater use

Dependentvariable:Log of cubic meters Dependent variable: Log of cubic meters

of water plrchased from vendors per month of water purchased from hydrants per month
Independent variables E&mated standard Ewimamd Standard
coefficient error Independent variables coefficient crrac

Price per m3 (log) -0.48 0.141+ Price per ms Oog) -0.60 0.265t
Household monthly income 008) 0.03 0.190 Household monthly income (log) 0.12 0.362
Time spent coRectin8 W&X (log) -0.03 0.014t Tie necessary for each purchase -0.002 0.01
Distance to nearest hydrant (log) -O.ooOl 0.001 Distance to nearest hydrant (log) 0.001 0.002
Purchase from hydrant -0.012 0.193 Purchase from vendor -1.44 0.439*
Time to commute to work (minmes) -0.004 0.003 Time to commute (minutes) -0.01 0.011
Household sire 0.06 0.038 Household size 0.08 0.065
Age of head of household 0.01 0.010 Age cf head of household -0.04 0.016t
Years in house 0.01 0.007 Years in house -0.005 0.013
Tenant -0.02 0.172 Tenant 0.42 0.341
Floa area of house (in meters) 0.0004 0.001 Floor area of house (in meters) o.ooo2 0.005
Share toilet? (yes = 1) -0.19 0.148 Share toilet? (yes = 1) -0.1 0.386
Reservoir capacity 0.001 0.003t Reservoir capacity -O.).oooool o.OOo&?
Located in rural area -0.37 0.226 Rural location -0.482 0.530
R2 0.572 R* 0.763
N 101 N 43

*sign&ant at 1% *significant at 1%
tsigniticant at 5% ~significant at 5%

Simultaneity issues may also be important, as in the endo-
geneity of reservoir sire. Given the length of tenure in this
sample, this may not be a substantial problem The reser-
voir investment decision was certainly codetermined with
the expected need for water, but in many instances that wss
some years ago. Fcr all practical puposes. the size of the
water storage facility can be considered exogenous to any
one weeks water purchase decision. This is less true of
households who have recently acquired their storage tank,
and the issue should be carefully addressed in future
research. lbe codetermination of source and quantity pur-
chased is a separate and somewhat complex issue not
addressed here. See Mu, Whittington and Briscce (1990)
and Altaf, et al. (1990) for empirical strategies.