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2018-02-23 | project

Economics of domestic water reform in Ho Chi Minh city: water demand, preferences for tariff structure and distributional effects

In this study, we propose to examine the impacts of water tariff increase on the demand for tap water and ground water simultaneously. Results of this study will provide information for the design of water tariff as well as suggest alternative policies in encouraging water conservation behavior. The study is expected to contribute to a more sustainable water governance in HCMC.

Ho Chi Minh City (HCMC), the largest city in Vietnam, is experiencing a rapid increase in aggregate water demand because of an increase in per capita consumption and rapid urbanization. This results in a high Water Stress Index (WSI), which calls for a reduction in water consumption in HCMC. In doing so, possible policy measures may include increasing water price. However, increasing the water tariff in HCMC in order to reduce water use may result in more households switching to groundwater, which is currently open access. As a result, the policy of increasing water tariff need careful examination before implementation. In order to reduce water use, policies in addition to tariff reform are required.

This research has the following objectives:

  1. Examine the impacts of water tariff on the demand for piped water and groundwater using the Almost Ideal Demand System;
  2. Investigate the determinants of water conservation behaviors with a multivariate probit model;
  3. Investigate household preferences for water tariff structures using a choice experiment;
  4. Examine distributional effects of the water tariff reform in Ho Chi Minh city.

Data will be collected from a survey of 2000 households in HCMC.