| By: |
Fuente, David (School of the Earth, Ocean and Environment, University of South Carolina, 701 Sumter Street, Columbia, SC 29208, USA);
Gitu, Josiah (Nairobi City Water and Sewerage Company Ltd, Kampala Road, Nairobi, Kenya);
Mwaura, Mbutu (Nairobi City Water and Sewerage Company Ltd, Kampala Road, Nairobi, Kenya);
Mulwa, Richard (Environment for Development-Kenya, Department of Economics and Development Studies, University of Nairobi, Harry Thuku Road, Gandhi Wing Room 309, P.O Box 30197 Nairobi, Kenya);
Cook, Joseph (School of Economic Sciences, Washington State University, 101 Hulbert Hall, PO Box 646210, Pullman WA 99164-6210, USA) |
| Abstract: |
Utilities across the global require stable revenue streams to provide
customers access to high quality energy, water, sanitation, and other
essential services. This requires policy makers to set prices to cover costs,
promote the efficient use of resources, and ensure services are affordable. It
also requires that customers pay their bills. Historically, utilities have
used disconnections, or the threat of disconnection, to compel customers to
pay their bills on time. However, the increasing recognition of the human
rights to water and sanitation by many governments and the COVID-19 pandemic
have led some water utilities to discontinue or curtail disconnections.
Reducing arrears and encouraging on-time bill payment is essential to get
utilities in the Global South on the path to financial sustainability. This
raises an important question for scholars and policy makers alike: if
disconnection for essential services is viewed as socially or politically
unacceptable, how can utilities encourage customers to pay their bills? In
partnership with the water utility serving Nairobi, Kenya, we test the impact
of a set of simple, low-cost reminders on customer bill payment using a
pre-registered, randomized controlled trial of 50, 000 residential customers.
We use four measures of payment behavior: making any payment, paying the full
current month’s bill, total arrears accumulated over the six months when
messages were sent, and the fraction of the cumulative 6-month bill paid. We
find that SMS-based bill payment reminders were not effective at improving
bill payment on average. Nudges alone seem unlikely to solve the problem of
water debt. |