The structure of informal water markets: Insights from spatial monitoring in Lodwar, Kenya

Abstract

Public water utilities have struggled to keep pace with rapid urbanization, particularly in towns and small to medium-sized cities of low-income regions. Informal water markets have proliferated to fill gaps in piped water coverage and service delivery through a wide range of water vending activities (from private water sources to tanker trucks and handcart operators that distribute water). Despite the prevalence and persistence of water vending, the structure, impacts, and evolution of informal water markets in these settings remain poorly understood, especially the interaction between private vendors and public utilities. We seek to improve our understanding of mobile, distributing vendors (tankers, motorcycles) by advancing high-frequency, spatially explicit monitoring of water vendor transactions in Lodwar, Kenya. We examine both the market and spatial structure of the informal water supply system and then draw inferences about their impacts and evolution. We find that vendors that use motorcycles are not making profits from transporting water. We also identify many linkages between the formal and informal systems. For example, purchases of bulk water by water vendors account for 28% of the public water utility’s revenue. We also find that while most consumers of vended water are located outside of the piped water service area, many households and institutions inside the service area still purchase from private water vendors due to concerns about reliability and quality. These results highlight the complementarities between public utilities and private water vending and the corresponding importance of mapping water vending networks to support planning, policy, and investment and to protect consumers.