Water expenditure, service quality and distributional outcomes in Latin America and the Caribbean

Latin America and the Caribbean (LAC) countries have made notable progress in reducing income inequality; however, the distributional incidence of water and sanitation expenditures across the income distribution remains poorly understood. In this sector, disparities emerge as lower-income households may encounter reduced access to clean water, utilize less water, or bear a disproportionately higher financial burden than higher-income households. In this paper, we document the distributional incidence of water expenditures in the water and sanitation sector in LAC. We compute and compare concentration indices for water expenditures and income for Brazil, Colombia, Costa Rica, and Uruguay using survey data from the AmericasBarometer of the Latin American Public Opinion Project (LAPOP). Our descriptive analysis shows that low-income households allocate a larger share of their income to water expenditures than high-income households. Comparing the concentration curve for water expenditures to the Lorenz curve for each country, we find that water expenditures are more evenly distributed across households than income, an inherently regressive pattern given that households spend similar absolute amounts regardless of income level. We further show that total water expenditures, encompassing piped water, bottled water, and water delivered by trucks, are distributed more similarly to income than piped water alone in Brazil, Costa Rica, and Uruguay, while the opposite holds for Colombia. We discuss how these cross-country differences are consistent with variation in water tariff subsidy designs and with the higher propensity of wealthier households to substitute toward bottled water.