WATER MARKETS, MARKET REFORM AND THE URBAN-POOR - RESULTS FROM JAKARTA, INDONESIA

Roughly 20% of the eight million persons in Jakarta receive water from municipal water connections to their homes. Remaining supplies are essentially private and include street vendors, stand-pipes, and wells - the last of these an inexpensive but increasingly contaminated source in many areas. An expansion of the network of in-house connections is in progress, but will take several decades to complete. In the interim, various strategies have been advanced to deal with persistent problems of access to good water by the poor. This study examines the impacts of one such plan put to action, the April 1990 deregulation measure permitting private homes with water connections to resell municipal water. We present preliminary evidence that the primary social benefits of deregulation are the money savings and increased consumption by former vendor and standpipe customers. In most respects the aggregate effect is equivalent to a costless expansion in the standpipe system, with the difference on the supply side that significant transfers from vendors and standpipe operators to household resellers may occur.