Premium
Rent‐extracting behavior by multiple agents in the provision of municipal water supply: A study of Jakarta, Indonesia
Author(s) -
Lovei Laszlo,
Whittington Dale
Publication year - 1993
Publication title -
water resources research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.863
H-Index - 217
eISSN - 1944-7973
pISSN - 0043-1397
DOI - 10.1029/92wr02998
Subject(s) - economic rent , water supply , monopoly , business , distribution (mathematics) , water industry , environmental economics , private sector , public sector , service (business) , natural resource economics , economics , marketing , economic growth , engineering , market economy , environmental engineering , economy , mathematical analysis , mathematics
A framework is presented for the analysis of rent‐extracting behavior by multiple agents involved in the provision of municipal water supplies in Jakarta, Indonesia. It is shown that such behavior can dramatically affect the terms and conditions under which water service is offered to the public. A water supply system based on limited numbers of public taps, relatively few house connections, and water vendors can generate substantial monopoly rents that can be appropriated by both public and private agents. Most professionals involved with water supply projects in developing countries typically assume that the objective of municipal water authorities is to serve the public interest. In fact, agents involved in the water delivery system may pursue strategies designed for private gain, which can have important and pervasive implications for how a water system is actually designed and operated. Proposals to change the technical, engineering aspects of a water distribution system can thus threaten the interests of powerful groups. Effective public policy and donor involvement in the water sector must be based on an understanding of the structure of water markets and the political power supporting existing institutional arrangements.