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Thursday, March 22, 2007

TN4B: World Water Day and the BOP Penalty

By Rob Katz

TN4B Peru Water Penalty2Our good friend Chris Monasterski over at the PSD Blog has used data from The Next 4 Billion to describe the market for BOP water on today, World Water Day.? Here's what he's got to say:

The brand new report The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid quantifies the BOP market for water?3.96 billion people paying an estimated $20 billion annually.This market is strongly segmented with the poorest - annual income below $1500 - footing over 50 percent of the BOP water bill in Burkina Faso, Cote d?Ivoire, Nigeria, Pakistan, Tajikistan and Uganda. In Nigeria, 22 million of lowest-income households spend $444 million.

I'll add below a short excerpt from Chapter 4 of The Next 4 Billion (the water chapter) that deals directly with the BOP penalty.? For visual evidence, check the graphic above.

There is a widely held view that the BOP suffers a significant penalty in access to safe drinking water?and household survey data confirm this view. Consider access to the most reliable and affordable source, piped water in the home. In 9 of the 29 countries for which sufficient data exist for a comparison, the ratio of mid-market households to BOP households with access to piped water is 6:1 or higher. Data on access to public standpipes show a similar pattern?significantly lower access in the BOP than in the mid market.

While BOP households are more likely to use surface water and less likely to have access to piped water, a third alternative, especially in periurban areas, is to buy from mobile water vendors. But this option typically involves a significant price penalty. One study showed that in eight major cities water vendors charge prices 8?16 times those charged by public utilities (UNDP 2006). Another study, covering 47 countries, found that mobile distributors such as tanker trucks charge unit prices up to 10 times the price of piped water.
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