Are Bangladeshi urban slum landlords ready to pay for safe water? - Willingness-to-pay for an automated chlorination device at shared water points in Dhaka, Bangladesh

Sonia Sultanaicddr,b

2016 Water and Health conferenceChapel Hill, North Carolina

10th October, 2016

Introduction• >130 million people living in urban areas of developing countries

lack access to safe water¹

• In Dhaka, Bangladesh, almost one third (3.4 million) of the population lives in slums and obtains water through shared water points²

• Approximately 80% of these water points are contaminated with fecal indicator bacteria

• Centralized disinfection at a water treatment plant, and point-of-use treatment by individual households -- both have consistently failed to provide safe water in Dhaka³ ⁴

Objective

This study estimates demand (willingness to pay) amongBangladeshi slum Landlords for a novel water treatment device(Aquatabs Flo) that is attached to shared water points drawing water from the public water network

Aquatabs Flo Water Purification System

Method

• Study period:

February 2015 - March 2016

• Study sites:

Purposively selected slums in Sattola and Mirpur, Dhaka

• Study participants:

Landlords and tenants of rental housing units(compounds)

• Sample size:

100 compounds with a goal of selling 40 installation and refill service packages

Method

Compound Selection criteria:

1)5-30 households

2)Shared water points that is Acquatabs Flow compatible

3)Legal, billed water connection to public network

Method

Baseline survey ofLandlords and households with informed consent

One to one

marketing and

promotion with

Landlord

One to one Becker-

Degroot-Marschak

(BDM) auction

with interested Landlords

Installation of service package in

compounds where

Landlords won the auction

Follow up household

survey &

Monthlypayment collection

for 12 months

MethodAcquatabs Flow service packages:2 Service package options with 6 different prices for each

Package 1:• Consists of a Acquatabs Flow

device and monthly refills• Prices include (USD) $0.65, $1.3,

$3, $4, $5, $ 7Package 2:• Consists of a Acquatabs Flow

device, monthly refills, a new hand pump and its maintenance

• Prices include (USD) $2, $3, $4, $5, $7, $8

W A T E R P U R I F I C A T I O N S Y S T E M

F O R A M O R E P R O S P E R O U S C O M M U N I T Y

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Convenient – Low cost – Maintenance free

Works even without electricity

Quick to install and serviced by trained technicians

Safe water for all your uses

0000000 – 0000000– 00000000

00000000000000000000

00000000000000000000000000000000000

MethodBecker-Degroot-Marschak (BDM) auction method⁵:The BDM auction elicits maximum binding bids in a way that incentivizes participants to reveal their true willingness to pay (WTP)⁶

Auction procedure with Landlords:

Acquatabs Flow installation

Bid price > Lottery price= Win

Matching bid price with lottery price

Lottery with six closed envelops

Selection of a price from the 6 fixed costs (the bid price)

Selection of service package 1 or 2

Method

Payment collection:

• First monthly payment was collected during the day of device installation

• Additional payment was collected on a monthly basis

• In the event of non-payment, the device was removed

Result

Landlord enrolled

in Baseline N=131

Landlordparticipated

in Marketing

N= 98

Landlordparticipated in Auction

N=79

Landlord won

AuctionN=64

Total LandlordrefusalN=98

Householdenrolled in

BaselineN=420

98(75%) 79(81%) 64(81%) 40(63%) 29(30%) 332(79%)

Table-1: Study participation

• In each stage participation was higher in Sattola then Mirpur

• 33 Landlords refused baseline and 22 (67%) of them refused to participate due to short duration of the service contract

•38(95%) Landlords installed the Acquatabs flow in their compound

Results

Mean willingness to pay (WTP):

• 72% of the Landlords chose Acquatabs Flow service package 1

• Mean monthly WTP was 294BDT (US$4) including both packages among the auction participant. The current estimated cost for a similar service is 480 BDT (~US$6) which is slightly higher than the mean WTP

• The mean WTP was 254 BDT (US$3) for package 1 and 395 BDT (~ US$5) for package 2

• Assuming 0 WTP for the device among the Landlords who refused to participate either in marketing or auction, then mean monthly WTP was 237 BDT (~US$3)

Results

Continuation of monthly payment:

• 47% (18) of the Landlords paid monthly fees up to 4 months

• 32% (12) of the Landlords paid monthly fees up to 6 months

• 21% (8) of the Landlords paid for the disinfection service throughout the 12 months period

Result

Chlorine Dosing:

• The aim was to control and maintain the chlorine residual in the water between 0.1 mg/L- 2 mg/L of free chlorine

• To avoid taste and smell complaints from enrolled households the chlorine residual in water was kept below 2 mg/L

• 742 water samples were tested across 28 compounds between May, 2015 - April, 2016

• 77% of the samples had 0.1 mg/L or above for free chlorine residual with an average free chlorine residual of 0.64 mg/L

• Typical refill frequency ranged from 2-10 weeks

Reasons for uninstallation We had to uninstall the chlorination device from 30(79%) of the compounds at various stage of monthly payment collection

Major reasons for uninstallation :

1) Direct connection with central piped water supply bypassing the tank where the device was installed due to water scarcity (water point became incompatible with device) (8 compounds)

2) Tenant complaints about smell and taste of chlorinated water (8 compounds)

3) Inability to continue monthly payment (4 compounds)

4) Due to an incident of using degraded reagents before May, 2015, the team was not successful in controlling the dosing and ensuring optimal user satisfaction; 10 compounds uninstalled the device during this period

Conclusion•21% of the Landlords paid the monthly service fee for 12 month with a mean monthly WTP of 294BDT (US$4) for the Aquatabs Flo device

•Findings inform target monthly service price for Dhaka

•Customer turnover for the business model should be expected

•Chlorine taste and smell complaints related to overdosing are still a major challenge for water purification using chlorine products in Dhaka

•Our team has explored the chlorine taste detection threshold in Dhaka to inform dosing targets

•We are currently conducting a chlorine demand test study to further understand and overcome the chlorine dosing issue

•Also currently conducting a second phase study to understand WTP among higher income landlords (multi-story buildings)

Recommendation

• Further adaptation of the chlorination device to fit it on taps or hand pumps would help to prevent uninstallation due to direct connection of the compound water line with the central piped water supply bypassing the underground or overhead Tank during water scarcity

• Further study with longer duration of chlorination device service package might increase participation and generate more insights to the viability of a landlord-targeted business and marketing strategy for water treatment

References 1. Zwane, A.P. & Kremer, M., 2007. What Works in Fighting Diarrheal Diseases in

Developing Countries? A Critical Review. World Bank Res Obs, 22(1), pp.1–24.

2. UNDP, UNDP in Bangladesh 2013, Recognizing Slums in Bangladesh. Available from: <http://www.bd.undp.org/content/bangladesh/en/home/presscenter/articles/2013/10/03/recognizing-slums-in-bangladesh.html>. [3 October 2013].

3. Arnold B, Arana B, Mäusezahl D, Hubbard A, Colford JM Jr., 2009. Evaluation of a pre-existing, 3-year household water treatment and handwashing intervention in rural Guatemala. Int J Epidemiol, 38(6):1651-61.

4. Luby SP, Mendoza C, Keswick BH, Chiller TM, Hoekstra RM., 2008. Difficulties in bringing point-of-use water treatment to scale in rural Guatemala. Am J Trop Med Hyg,78(3):382-7.

5. Berry, J. M., Fischer, G. M., & Guiteras, R. P. (2012). Eliciting and Utilizing Willingness to Pay: Evidence from Field Trials in Northern Ghana. Unpublished.

6. Luoto, J., Mahmud, M., Albert, J., Luby, S., Najnin, N., Unicomb, L., et al. (2012). Learning to Dislike Safe Water Products: Results from a Randomized Controlled Trial of the Effects of Direct and Peer Experience on Willingness to Pay. Environmental Science & Technology , 46 (11), 6244-6251.

icddr,b:Dr. Mahbubur RahmanMohammad Rofi UddinShabiha Begum All Field staff

Co-authorsYoshika CriderAmy PickeringNajrin AkterFrederick GoddardSyed Anjerul IslamLeanne UnicombStephen P. LubyAtonu RabbaniJenna Davis

All the research participants Contact: sonia.sultana@icddrb.org

Stanford UniversityJenna Swarthout

Acknowledgments

Medentech, Ireland: Kevin O’Callaghan

Innovation for Poverty Action, Bangladesh

icddr,b thanks its core donors for their on-going support

This project has been fundedJPAL/IPAUSAIDStanford University Woods Institute for the Environment