Economic Insights into Providing Access to Improved Groundwater Sources in Remote, Low-Resource Areas

Groundwater is often the most or only feasible drinking water source in remote, low-resource areas. Yet the economics of its development have not been systematically outlined. We applied CBARWI (Cost-Benefit Analysis for Remote Water Improvements), a recently developed Decision Support System, to investigate the economic, physical and management factors related to the costs and benefits of non-networked groundwater supply in remote areas. Synthetic profiles of community water services (n = 17,962), defined across 14 parameters' values and ranges relevant to remote areas, were imputed into the decision framework, and the parameter effects on economic outcomes were investigated through regression analysis (Table 1). Several approaches were included for financing the improvements, after Abramson et al, 2011: willingness-to -pay (WTP), -borrow (WTB) and -work (WTW) in community irrigation (';water-for-work'). We found that low-cost groundwater development approaches are almost 7 times more cost-effective than conventional boreholes fitted with handpumps. The costs of electric, submersible borehole pumps are comparable only when providing expanded water supplies, and off-grid communities pay significantly more for such expansions. In our model, new source construction is less cost-effective than improvement of existing wells, but necessary for expanding access to isolated households. The financing approach significantly impacts the feasibility of demand-driven cost recovery; in our investigation, benefit exceeds cost in 16, 32 and 48% of water service configurations financed by WTP, WTB and WTW, respectively. Regressions of total cost (R2 = 0.723) and net benefit under WTW (R2 = 0.829) along with analysis of output distributions indicate that parameters determining the profitability of irrigation are different from those determining costs and other measures of net benefit. These findings suggest that the cost-benefit outcomes associated with groundwater-based water supply improvements vary considerably by many parameters. Thus, a wide variety of factors should be included to inform water development strategies. Abramson, A. et al (2011), Willingness to pay, borrow and work for water service improvements in developing countries, Water Resour Res, 47Table 1: Descriptions, investigated values and regression coefficients of parameters included in our analysis. Rank of standardized β indicates relative importance. Regression dependent variables are in [($ household-1) y-1]. * Parameters relevant to water-for-work program only.† p