Urban water demand management in Ulaanbaatar, Mongolia

Altai, Zulgerel (2013) Urban water demand management in Ulaanbaatar, Mongolia. PhD thesis, James Cook University.

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In many parts of the world, water resources have been decreasing in urban areas where resources are unable to meet ever-increasing demands, even though water is considered a renewable resource. Supply side factors for increasing water scarcity in urban areas are shrinking or changing natural – hydrological - resources due to human activities, as well as climate change. Climate change exacerbates increased stress on water resources. Population growth, particularly rapid urbanisation with improving living conditions has been increasing water demand and furthermore, has been an influential factor that contributes to water scarcity in urban areas. Traditional solutions for water scarcity in urban areas have been to expand and to improve water supply through the construction of dams, and desalination and recycling plants that are costly and expensive options for developing countries. However, developing countries also have to address issues of water access equity and to achieve the Millennium Development Goal (MDG). For this reason, these urban areas are concerned with how to improve the efficiency of water end use and the efficacy of the water supply system.

Industrialised countries have proven that better urban water management, particularly demand side policies, can alleviate problems of urban water scarcity. Urban water demand side management policies aim to provide sufficient and safe water to all users through improving the efficiency of water use. Better urban water management policies are also needed in developing economies to meet the two main issues of inadequate water resources and the inequitable distribution of water. Increasing water scarcity, coupled with hydrological and financial limitations to the development of new resources, have catalysed a shift to demand management, which is a relatively new branch of the urban water resource management. These policies not only focus on inducing users' water consumption directly but also indirectly influence water saving habits for improving efficient water use.

There are no comprehensive studies available to provide precise and accurate information about the potential effectiveness of urban water demand side management in developing and transit economies. Ulaanbaatar, the capital city of Mongolia, faces a growing problem of water scarcity. Ulaanbaatar is typical of cities that are currently experiencing high and urbanising population growth, poorly regulated industrial expansion and associated increases in demand for domestic and industrial water. However, Mongolia's climate is characterised by low precipitation and high evaporation; groundwater supplies are diminishing, and the capital city is likely to face water scarcity problems in the next few years. Moreover, the city needs money to invest in essential infrastructure that would help address issues, such as the inequity of supply services between Ger and formal living areas and the fact that an estimated 20.4% of water is 'lost' through leakage. The aim of this study is to explore the potential efficacy of water price and non-price policies as a partial solution to some of these problems. The study looks at how to assess the sensitivity of water demand to price changes and to learn more about the water saving habits of residential and non-residential users. Furthermore, the investigations comprehensively involve various user groups: non-residential users including manufacturing, commercial and government user groups, and residential users including formal 'apartment' and informal 'Ger' settlement households.

The study area is data poor, which is quite typical of developing countries. Therefore, data had to be collected and in this study questionnaire surveys were used. After the first year's (2010) data collection, two water policy events occurred in the city. The price of water for apartment area users was increased and the government announced that 2011 would be a 'water year' with a concerted media campaign. For this reason, data were collected again in 2011 to check the effectiveness of the Government media campaign and for collecting more data from non-residential users.

The contingent behaviour method (CBM) – commonly used to estimate the non-market values of individuals – was adapted to business settings. It uses data that were collected from more than 375 non-residential water users in Ulaanbaatar, and estimates the price elasticity of water demand for three different user groups (manufacturing, commercial and governmental users). Non-residential water demand is shown to be relatively price inelastic with values ranging between -0.186 and -0.24. This inelasticity implies that prices would have to increase substantially to generate any significant reduction in water use (e.g. doubling prices would result in a 3.6 % reduction in water use), but that significant revenues could potentially be raised. The results also indicate that attempts to influence water saving habits (e.g. introducing water saving technologies or encouraging water conserving activities) through non-price policies may reduce non-residential water demand more than would increases in price.

This study also demonstrates also the potential efficacy of pricing and non-pricing policies on residential water demand. It uses data that were collected from a survey of nearly 960 residential water users from formal and informal settlement areas in Ulaanbaatar. The data collected in 2010 provide a pre-increase base and those from 2011 follow an observed increase in price. Water consumption in metered and non-metered homes was estimated using both the direct indication and conditional demand approaches and a CBM was then used to estimate the price elasticity of water demand for different types of users (formal settlement – apartment areas and informal settlement – Ger areas). The CBM indicates that consumption is relatively sensitive to small price changes among the households and that informal settlement households are likely to react to price changes much more. This study found that residential price elasticities, which were between -0.941 and -0.099 for non-metered households in 2011, were closer to observed responses when respondents had experienced actual recent price increases.

Item ID: 29889
Item Type: Thesis (PhD)
Keywords: Ulaanbaatar, Mongolia; urban water management; industrial water management; water resources planning; resource economics
Date Deposited: 24 Oct 2013 02:46
FoR Codes: 14 ECONOMICS > 1402 Applied Economics > 140205 Environment and Resource Economics @ 33%
12 BUILT ENVIRONMENT AND DESIGN > 1205 Urban and Regional Planning > 120599 Urban and Regional Planning not elsewhere classified @ 34%
16 STUDIES IN HUMAN SOCIETY > 1604 Human Geography > 160404 Urban and Regional Studies (excl Planning) @ 33%
SEO Codes: 96 ENVIRONMENT > 9609 Land and Water Management > 960912 Urban and Industrial Water Management @ 100%
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