Elizabeth Spink, PhD, Lecturer at Tufts University and Postdoctoral Researcher at Harvard University, will present the EEEP Seminar Series, “Utilities as Creditors: The Effect of Enforcement of Water Bill Payment in Zambia” on February 3, 2023.
Abstract: Policy goals of increasing household access to piped water and cost recovery for utility providers are often at odds. Nonpayment of utility bills is a common constraint to improving the quality of utility service, yet nonpayment is widely tolerated, and households often accumulate significant debt to the utility provider. I study the effect of increases in enforcement of water bill payment through supply disconnections in Livingstone, Zambia. I develop a dynamic model of household monthly payments and accumulation of arrears, which determines the household’s probability of disconnection.I show that higher levels of enforcement increase the optimal payments for connected households but reduce a household’s willingness to reconnect to the water utility when disconnected. I empirically test this model using an event-study framework of exogenous increases in enforcement capacity that occur during administrative rezoning events, which reduce the number of households that one enforcement agent is responsible for. I find that low-income households are 20 percent more likely to be disconnected from their water supply after rezoning events, while high-income households experience no change in disconnections. Households are more likely to make a payment following rezoning events, but revenue increases are small and short run. The results suggest that high enforcement of water bill payment toward credit-constrained households may be ineffective and leads to reduced piped-water access.
Read full paper: www.dropbox.com/s/wjvmu8i136bphvq/JMP_Spink_Elizabeth.pdf