The coping costs of dealing with unreliable water supply in the Nairobi commercial sector

Commercial businesses are vulnerable to shortages or reliability in water supply, particularly those for whom water is a significant input and water prices and quality are likely to be salient. Depending on their ability to substitute to alternative water sources, reliance on unreliable municipal water may result into higher water input costs for firms, which may reduce profits or be partially or fully passed to consumers. In this study we surveyed 400 commercial firms in Nairobi, Kenya that had piped water connections to the municipal network to examine their water-related coping mechanisms and costs. Only 20% receive water for seven days in a week; 48% receive water for between one to four days in a week. We find that one quarter of firms share water with neighbouring businesses that are not experiencing water rationing. Additionally, 94% of businesses rely on water storage facilities as their main coping strategy. 6% of the surveyed firms invested in their own private boreholes, and one quarter rely on water vendors. We valued these costs using information reported by respondents, finding that the average monthly coping costs are approximately US$300, which are in addition to the $130 paid monthly to the municipal provider by the average firm. These coping costs were driven by the cost for vended water ($118.5). The levelized cost of water storage equipment was $11. We estimate that coping costs are greater than 130% of the monthly cost of piped water network in the case where businesses depend on boreholes. A multivariate analysis of total coping costs suggests that the age of business, connection to the piped network, and number of toilet facilities within business premise significantly drive the coping costs.