Do Households Want Privatized Municipal Water Services? Evidence from Kathmandu Nepal

Over the last decade the global movement toward involvement of the private sector in the provision of municipal water supply and sanitation services has been rapidly gaining momentum--and so has the political opposition. Is it true that poor households in developing countries oppose private sector involvement in the provision of municipal services? Are poor households actually hurt when private sector providers are engaged to deliver water services? We seek to contribute to this debate by examining households' demand for the improved water services in Kathmandu, Nepal where the government is considering the possibility of involving the private sector in the operation of municipal water supply services. We surveyed a randomly selected sample of 1500 households in the Kathmandu Valley and asked respondents questions in in-person interviews about how they would vote if given the choice between their existing water supply situation and an improved water service provided by a private operator. The results provide the first evidence from South Asia that households' willingness to pay for improved water services are much higher than their current water bills. Moreover, our results suggest that households in Kathmandu are positively inclined toward the involvement of the private sector in the effort to improve the quality and reliability of piped water services. We find substantial public support among both poor and nonpoor of households for a privatization plan that would improve water supply and require all participants to pay regular and higher monthly bills.