Looking at these questions in Tamilnadu, researchers from Birmingham University propose new economic concepts applicable to institutions providing rural and urban water for India. Maintenance of information systems and negotiations with landowners, industry and other water users, all cost time and money, as do interactions with other agencies. Differing institutional arrangements and levels of efficiency may have positive or negative effects on the scale of these 'transaction costs'. Using evaluation criteria such as efficiency, equity, accountability and adaptability, the report suggests ways to minimise transaction costs.
Water is perceived as a free public good.
The full cost is borne by the state government but the scheme is financially unsustainable. Some rural households are willing to pay for better services. This preparedness to pay is far more common in developing countries than commentators have previously tended to assume. Domestic consumers who are able to pay would prefer to have an individual household supply than contribute to the improvement of community standpipes. Consumers are more willing to pay for water if they perceive the supply as reliable.