Water Price Optimization after the Melamchi Water Supply Project: Ensuring Affordability and Equitability for Consumer’s Water Use and Sustainability for Utilities

Sustainability of water supply services has been central to the main water supply agenda globally. In order to promote affordable, equitable, and sustainable water supply, this paper proposed a method to set the piped water price inside Kathmandu Valley, Nepal. The Melamchi Water Supply Project (MWSP) is currently under construction inside the valley to tide over the water deficit. Domestic water use and expenditure data were obtained from a household survey of 1500 households. Post-MWSP were developed based upon per capita water use and water price. Equity and affordability were evaluated by comparing the ratio of water expenditure to total expenditure of households (expenditure ratio: ER) in each service area. The expenditure for piped water service and alternate water sources was taken into account to calculate the total water expenditure. Sustainability was measured as the ratio of operation and maintenance cost to the total revenue of the utility (Working ratio: WR). The results show that an increase in water price by approximately 54% over the current price is necessary to meet operation and maintenance costs, assuming the WR to be 0.7. Approximately 30% increase in water use (a minimum of 80 LPCD) can be maintained post MWSP. However, water use of 135 LPCD increased the ER by more than 1%, which was the threshold of water affordability and may cause ground water stress.