Substitution of piped water and self-supplied groundwater: The case of residential water in South Africa

The choice of water for use by residential households is usually limited to the centralized and more regulated piped water or the decentralized and less regulated groundwater sources. Many households secure access to water through self-supply from groundwater sources, consequently putting the resource at risk. Our analysis shows empirical evidence on the determinants of households' choice of water-supply sources and suggests a high substitution threshold for piped water and self-supplied groundwater in South Africa. Furthermore, we provide insights into the potential welfare impact of a stylized piped water tariff change that reduces prices and leads to increased piped water choices.

Automated summary

Residential households in South Africa have limited choices for water supply, either through regulated piped water or less regulated groundwater sources. Many households opt for self-supply from groundwater, which puts the resource under risk. This study analyzes the factors influencing households' choice of water supply sources and suggests a high threshold for substituting between piped water and self-supplied groundwater. Furthermore, it provides insights into the potential welfare impact of a stylized piped water tariff change.