Water

Water Briefs
Delivering Piped Water on a Small Scale
Results of ADB’s Water Supply Service Market Survey in Manila
October 2007

Asia’s slum communities need water today—not from deep wells or community standpipes, from tankers, or plastic bottles. They need safe and affordable water conveniently available from taps inside their houses.

But household connections from water utilities take ages, if not completely impossible. In the meantime, households unserved by the water utility obviously get their water from somewhere. Where? How much are they paying for it? Are they getting safe water?

In 2002, the Asian Development Bank (ADB) commisioned a study¹ to understand how the urban poor get their water if not from the water utility. The study found that as many as 50% depend on a variety of small-scale water providers (SSWPs) for most or all of their daily water needs. These vendors may be a small company, cooperative, or enterprising individuals operating within the community, such as a neighbor reselling water from a private well or piped connection, a water tanker brought in by a private company or a politician, or a bottled water supplier.

If SSWPs are responding to the needs of unserved households, how are they delivering the water? Does a household’s income determine the type of SSWP it uses? Given the slow rate by which urban poor communities are getting connected to a water utility, are SSWPs here to stay?

Understanding how SSWPs operate, where they thrive, what markets they perpetuate, and how they can improve their services will enable government officials and policy makers to provide poor communities with the safe, affordable, and piped water they sorely need.

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ADB believes that small piped water networks (SPWN), a system used by SSWPs, offer temporary yet building-block solutions to the water problems of slum communities. In 2005, ADB designed pilot projects to demonstrate the use of SPWN for speedy piped water delivery.² These pilot projects aim to quickly connect selected urban poor communities in India, the Philippines, and Viet Nam to piped water supply on an interim basis until such time that the water utility is able to do so.

ADB’s pilot projects in the Philippines involved collaboration with Metro Manila’s two concessionaires: Manila Water Company, Inc. and Maynilad Water Services, Inc. To date, roughly 1,650 households in 10 urban poor communities have been connected. While this number is promising, a large segment of Manila’s urban poor remains unconnected.

To understand how these households are coping with their need for safe water, ADB commissioned a market survey on the kinds of SSWPs servicing Metro Manila’s urban poor. The survey focused on how households access water, how much these waters cost, and if they are safe and reliable.

Between March and April 2006, 12 survey teams conducted interviews with randomly chosen household respondents in 20 survey sites. A total of 13,791 households unserved by water utilities participated.

The survey teams also conducted interviews with SSWPs identified during the course of the survey. Some 46 piped water providers and 449 nonpiped water providers were surveyed.

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Piped water providers (PWPs) are businesses owned by persons or small organizations that provide piped water from various water sources for a certain fee.

Nonpiped water providers (N-PWPs) are businesses that sell water, but often with the use of delivery and peddling vehicles (such as water tankers, or pushcarts and tricycles carrying water containers). Others have a fixed location that people go to regularly to have their water containers filled, such as those that own deep wells or kiosks. The more enterprising N-PWPs sell water from their private wells, or obtain water from communal faucets or standpipes, or even re-sell water from the water utilities. Some even offer their garden hose to less fortunate neighbors, and only request a nominal fee.

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1. Piped Water Providers (PWPs)

Results from the 46 PWPs surveyed indicate that

• Almost half are “water enterprises” that own and operate their water supply systems; the rest are managed by cooperatives, homeowners associations, developers, and water associations. They have been in business for an average of 9 years, yet many remain modest companies, usually with only three employees. Half of them also need to secure their water permit from either the National Water Resources Board (NWRB) or the local government, as most are unaware of this legal requirement. A single PWP connects an average of 208 households
• Majority (38 PWPs) draw water from their own deep wells. The rest obtain it from the water utility; or from open dug wells, common faucets, or standpipes, or larger water vendors. Only seven of deep well water suppliers provide some form of chlorination, water treatment being an added expenditure
• Tariffs range from Philippine Peso (PhP) 5–130 (US$0.10–2.70)³ per cubic meter (m³). Only one of the PWPs surveyed has no metering system and charges a fixed monthly rate of PhP250 (US$5.20). Consumption and tariff have an inverse correlation—lower consumption is observed in households connected to the PWPs with higher tariffs and vice versa
• Connection charges range from zero to as high as PhP8,880 (US$185), almost as high as water utilities’ rates
• Some 85% of PWPs were funded by the owners; the rest secure their finances from external sources such as the government or private persons. None have access to bank loans.

2. Non-Piped Water Providers (N-PWPs)

Results from the 449 N-PWPs surveyed indicate that

• Half depend on common faucets or standpipes, water vendors, and open dug wells; 28% have their own private wells; and 23% obtain water from water utilities. About 38% of them have no water permit from the local government or the NWRB
• Huge water tankers, the most popular delivery vehicles, are used by 55% of N-PWPs. Those with private wells haul the highest volume of water at 62 m³ a day. Tankers sell more than 2,000 m³ in a month. Small pushcarts and pedaled tricycles are the most modest in terms of volume delivery, averaging only 1 m³/day
• Kiosks that have their own wells draw an average of 13 m³ a day, and sell an average of 404 m³ monthly. Their daily revenues are 50% higher than those earned by kiosks that get water from utilities and other sources
• But regardless of the delivery mode, water utilities are still the cheapest bulk water source among N-PWPs’ water sources
• Most N-PWPs are privately owned and funded, and have little or no access to major lending institutions, except for the rural or cooperative banks. Because of their profit-driven nature and the lack of government regulation, N-PWPs remain the most expensive and unreliable, quality-wise
• But regardless of the cost, N-PWPs are the most accessible to the urban poor, often less than 100 meters away. Most deliver water right at their very doorsteps.

3. Households

Results from the 13,791 households surveyed reveal that:

• A typical household of five members earns a decent average monthly income of PhP12,535 (US$261), but almost half of these households earn only PhP8,000 (less than US$170) monthly—barely above the poverty threshold. On the average, almost 5% of households’ monthly income—PhP603 (US$12.50)—is spent on water. They pay almost double this amount for electricity at PhP1,121 (US$23) a month
• Only 28% of the households have piped water connections from SSWPs, while a staggering 72% rely on nonpiped water sources—the huge gap indicating just how much work is still needed to connect the poor

Breakdown of SSWP Usage (% of Population)

• People with piped connections consume 4–5 times more water than those who depend on nonpiped water sources:

Most Consumed Water* (liters per capita per day)

*Data only covers households relying on a single water source.

• About 13.5% of households depend on multiple water sources, 48% rely on only one source, and 38.5% depend mainly on one source and bottled water
• Interestingly enough, almost half of those with piped water supply, mostly belonging to higher income households, still buy bottled water for drinking purposes. In fact, 95% of households prefer bottled water for drinking and cooking. Affordability, however, is an issue since bottled water costs the highest, averaging PhP6.42 per gallon (US$0.13)
• Among SSWPs, water from PWPs is cheapest at 7 centavos (US$0.0015) per gallon

Most Affordable Providers*

*Average prices from SSWPs at PhP per gallon.

• Regardless of the water source, however, 24-hour water supply remains a development goal. Piped water availability averages only 15 hours daily and can be as low as 4 hours.

4. Water use across socio-economic classes

• Water consumption is directly proportional to the households’ monthly income, with the biggest consumers earning more than PhP50,000 monthly (US$1,041.66). Households earning less than PhP8,000 monthly (US$166.66) use the least amount of water
• Piped water consumption is high across socio-economic classes and household types. Also, where piped water is available, households become more liberal in their use of water. But because piped connections are less available to lower income households, they are limited to using expensive nonpiped water, which they still pay for willingly
• Water consumption of urban poor households may be as low as 5–8 m³ a month—the minimum amount for domestic and sanitation requirements. The cost of this small volume, however, is almost double the cost that higher income households with piped connections pay for. Without piped connections from water utilities, urban poor households will remain highly dependent on unsafe, costlier, nonpiped water from N-PWPs.

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So what keeps urban poor households from being connected? The survey posits three major reasons:

Connections not available. Urban poor households and communities do not have access to piped water simply because the city’s two water utilities—Manila Water Company, Inc. and Maynilad Water Services, Inc—have yet to reach out to get them connected. In many areas in Metro Manila, construction of the necessary water infrastructures to connect the poor have not even started.

High connection charges. In areas where pipes have been laid and water connections are readily available, water utilities’ high connection charges hinder the poor from getting piped water. And because most PWPs’ water comes from unreliable deep wells without the benefit of water treatment, more households opt for other nonpiped water sources, including expensive bottled water.

Land tenure issues. For new water connections, water utilities require proof of land ownership upon application. Its absence disqualifies urban poor households from getting connected to water utilities. Manila Water Company, Inc. has recently waived this requirement.

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People will get water, with or without utility connections. Manila’s urban poor households already found various, though more expensive, means. Of these alternatives, PWPs stand out as the most desirable—not only do they offer the cheapest and relatively safest water, but the infrastructure they use can serve as building blocks of a better piped water system.

ADB’s pilot projects are already demonstrating PWPs’ potential. Its $200,000 technical assistance grant to four homeowners’ associations under Manila Water Company, Inc. and six homeowners’ associations under Maynilad Water Services, Inc. not only brought piped connections to 1,650 households in 4 short months; it also made possible a 3-year flexible installment scheme for connection charges. Pilot projects are also ongoing in India and Viet Nam.

But while PWPs offer interim solutions, Asia’s poor needs permanent solutions. Hence, the ultimate goal is still to bring water utility connections to urban poor households and communities. For the moment, though, ADB advises:

• City development strategies recognize the role of PWPs in local area development and put in place a framework to govern their operations
• Water utilities work with PWPs, and vice versa, to improve the level of technology implemented and ensure its compatibility with the utility’s so that a future transition to utility supplied water is smooth
• Small networks be formalized with licensing, exit strategies, and take-out agreements
• Minimum standards include risk and payback requirements
• Legal and contractual conditions be created
• Small operators be integrated into the water supply chain to the best extent possible.