Tariff structure and willingness to pay: case of Karachi Available to Purchase

A key consideration in satisfactory performance of a water utility is proper pricing and recovery of revenue from users. Experiences from the literature reveal that level of service decreases when utilities do not recover the bills issued against services delivered. Willingness to pay, tariff structure and overall level of service are important determinants in such scenarios. In Karachi, the Karachi Water and Sewerage Board is the water utility responsible for the supply of water to consumers. The board prescribes a tariff structure for the water supply service to different categories of users, which is revised at intervals. The utility recovers only 7% of all the water service bills issued to its consumers, which leads to financial problems. A study was conducted in 2009–2010 to investigate the relationship between tariff structure and the willingness to pay by consumers. Research methods adopted for this study included 47 semi-structured interviews with residents, key officials of the utility organisation, selected mayors, consultants and community organisations. The findings and conclusions reveal that inclusion of stakeholder perspectives, capacity assessment of utility and effective liaison between users and utility are vital factors with respect to policy and procedures.