and the amounts spent on water sold by vendors," on the mand curve (PW) is the aggregate of these curves since construction and repair of wells, h3ndpumps, water stor- piped watercan serve all these needs. However, thepoints age tanks, and on theopetation ofdiesel orelectricpumps, obtained from the survey cannot be aggregated because and time spent collecting and carrying water and operat- their coordinates on the vertical axis (that is, prices **P.** and ing nandpumps. While the value of consumers' time is not directly available from the water use survey, recent research suggests that it is close to the market wage rate for unskilled labor.30 29 When vendors are active in the project area, information unskilled labor.30 29 When vendors are active in the project area, information obtained from the water use survey about the cost and Unless there are indications to the contrary, it can quantity of water purchased from vendors will be substanbe assumed that actual payments represent economic **'** Iy more reliable than informationdescribingconsunipcosts--that is, the production and operation of wells, t,%n ofwater from other sources. However, water vending storage tanks, and pumps is a competitive industry with a isnotanecessaryconditionforusingthe?roposedmethod. flat cost curve. It is also assumed that no element of 30 Whittington, Mu, and Roche (1989). monopolistic rent distorts the price of water sold by 3' If a project is expected to replace a substantial amount vendors, and that vendors who lose their jobs due to the of water purchased from vendors, a water-vending survey piped water project can find alternative occupations with- to validate these assumptions is warranted. The survey out incurring any costs.3 should provide information about the cost and price of water at each phase of the vending system: at the water Usually it can be assumed that all nonpiped water source, at the retail outlets (hydrants or ki> ks), and, after use will be replaced by piped water in households that distribution, at the point of delivery to the households. choose to connect to the piped system.<sup>3</sup> " This assumption<sup>32</sup> The problem of determininghow many householdswant should not apply to households that will be served by to connect to the system is not analyzed in this paper. public taps; the amount of water use replaced will depend 33 Sunk costs cannot be saved, therefore only those costsSunk costs cannot be saved, therefore only those costs on the price of waterand the location of the taps compared should be taken into account which would not be incurred to the cost and convenience of presently used water if the project was implemented. While the cost of an sources. After the amount and cost of replaced water are already existing well or water pump cannot be avoided Usually it can be assumed that all nonpiped water source, at the retail outlets (hydrants or ki> ks), and, after use will be replaced by piped water in households that distribution, at the point of delivery to the households. choose to connect to the piped system.<sup>3</sup> " This assumption<sup>32</sup> The problem of determininghow many householdswant should not apply to households that will be served by to connect to the system is not analyzed in this paper. public taps; the amount of water use replaced will depend 33 Sunk costs cannot be saved, therefore only those costsSunk costs cannot be saved, therefore only those costs on the price of waterand the location of the taps compared should be taken into account which would not be incurred to the cost and convenience of presently used water if the project was implemented. While the cost of an sources. After the amount and cost of replaced water are already existing well or water pump cannot be avoided estimated, the calculation of cost savings resulting from (that is, it is sunk except for salvage value, if any), future the first part of water supplied by the project is relatively replacement costs or the cost of new wells snould still be straightforward (area OQ,DP, = Q, x P,, see Graph **1).33** considered.

<!-- Start of picture text --> The demand curve for<br>piped water is needed to estimate<br>benefits due to the second part. If<br>therewereonlyonewatersource, Graph 2: Aggregation of Water Demand Curves<br>the quantity and marginal cost of<br>water used from the source would prloe<br>determine a point on the piped<br>water demand curve. Frequently<br>there is more than one water Pd - \<br>source used, and water from dif-<br>ferent sources serves different ? -<br>needs. Theoretically, there is a . -n I I PWI _<br>separate water demand curve for w' N<br>each need (DW and ND in Graph<br>2). Observations obtained from- Qd qnd Ot quatIty<br>the water use survey describe the<br>consumption of water from these ND NondnIdng w dmand owe<br>sources. The marginal cost of PW Plpedwawdmandaurv<br>water from various sources is dif- Ond n-ddnQn wdar ommpaon<br>ferent; therefore, the points on the Ot Total wbroonsunmpton<br>Pd Magl cospr o doltkdng water<br>demand curves obtained from the Pnd Margirhk wotpr d non-drng water<br>water use survey belong to differ-<br>ent prices. The piped water de-<br><!-- End of picture text --> 10