Having to cope with pressures from climate warming, pollution, population growth and urbanization, water resource managers and stakeholders the world over are searching for ways to more effectively and equitably allocate increasingly threatened fresh water supplies.
The occurrence of historic droughts, seawater incursions into aquifers, and contamination of waterways highlight the threats. Here in the U.S., the contamination of Flint, Michigan’s water supply is among the latest developments to bring the point forcefully home. Flint is not alone. Drought in Brazil threatens the survival of 20 million-odd residents of Sao Paulo, the largest city in the Western Hemisphere.
City leaders are turning to hydrologists, urban planners and other stakeholders to find sustainable solutions. In celebration of World Water Day, Oxford University’s Smith School of Enterprise and the Environment has published a new working paper regarding how residents of Dar es Salaam, Tanzania’s capital city, are paying for water. Based on the largest known data set of urban water payment behavior, the study aims to promote financing of sustainable water resource management across Africa.
Examining water utility customer payments behavior
Entitled ¨Determinants of Customer Payment Behaviors in Urban Water Sector: Evidence from Dar es Salaam, Tanzania,¨ researchers from Oxford Smith School analyzed more than 500,000 utility water payment records from 2011 and surveyed more than 1,000 consumers. The data set included payments from large commercial and industrial utility customers, as well as charges for large residential connection and reconnection fees.
Collecting payments from water consumers has long plagued efforts to finance water resource infrastructure and utility services in Africa, the report authors point out. The situation has improved alongside now widespread popularity of mobile device payment apps and electronic payment systems, but their use poses challenges for water utilities and revenue collection, as well as customers.
Water utility customers in Dar es Salaam are increasingly turning to mobile payments as a substitute for the traditional means of paying in cash at company offices. Able to save time and money, more than 75 percent of survey participants said they make use of mobile payments to pay their utility water bills. The bulk of payments were made at 14 utility offices, however. Paying via wireless ¨pay point¨ kiosks was the second most popular payment mechanism, with mobile payments next.
Mobile money and wireless pay points were significantly smaller and made less frequently than cash payments at utility offices, the study revealed. They were also made much later in the day. Overall, mobile and wireless payments yielded substantially less annual revenue per customer than those made at utility offices.
Customers making use of multiple payment mechanisms exhibited the best characteristics: relatively high payment frequencies and overall revenue collection 18 percent higher than customers that only paid at utility offices.
In conclusion, the Oxford Smith School researchers ¨found limited evidence of a relationship between household characteristics and payment behavior.¨ They did find evidence that distance from payment location and how busy a utility office might be on particular days and times have a greater effect on how frequently customers make payments and the total revenue collected per customer each year.
Leveraging wireless and mobile payment technology
In sum, they concluded Dar es Salaam’s water utility has experienced an increase in customer payment frequency as a result of introducing wireless POS terminals and mobile payments. Doing so has given customers the freedom to pay when they want from almost anywhere in the city and environs.
Furthermore, revenue collection has improved and burden on utility employees has been reduced. These results could make it easier for the water utility to obtain financing that could be invested in expanding and improving access to sustainable water resources.
Additional highlights include:
- Utility customers value and actively use multiple payment alternatives (water office, point of sale, electronic/mobile), which increase payment frequency and volume;
- Water offices dominate payment transactions (92%) but electronic and point of sale alternatives complement rather than substitute to improve payment behaviour;
- People paying at multiple alternatives out-perform all alternatives by frequency of payments (7.6 per year) and average annual revenue ($120);
- Greater distance to water offices increased electronic payments reducing social costs (travel time, queuing);
- Socioeconomic characteristics (household size, education, employment, gender) did not influence payment behaviors;
- Limitations arose from a lack of data on metered usage, water quality or reliability: these data would improve understanding of variation in payment behaviors.
*Images credit: Oxford University Smith School of Enterprise and the Environment