Why Public Enterprises fail to provide basic needs in developing countries: The case of rural water supply

This paper examines the role of public enterprises in providing safe drinking water in developing countries and analyses the factors influencing households' water source choices using a revealed preference model.The study, conducted in rural Nepal, reveals a substantial willingness to pay for convenient access to safe water, challenging the notion that rural households, especially women, do not value time savings from improved water access.The findings suggest that the predominant supply-driven, heavily subsidised approach of public water utilities warrants reconsideration.The paper argues that the willingness to pay exists but the willingness to charge is stymied.This policy creates a vicious cycle of poor service and poor cost recovery.The paper suggests a paradigm shift towards a more demand-responsive approach, allowing households to choose and pay for their desired service levels while ensuring a minimum level of safe water for all.This could enhance sustainability, welfare, and financial viability of public water utilities.The study concludes that public enterprises have a critical role in ensuring universal access to safe water but should adopt a more dynamic, accountable, and service-oriented approach, incorporating user preferences and contributions while retaining their core public mandate.