IDEAS home Printed from https://ideas.repec.org/p/sza/wpaper/wpapers83.html
   My bibliography  Save this paper

The fiscal incidence of provision of free basic water

Author

Listed:
  • Servaas van der Berg

    () (Department of Economics, University of Stellenbosch)

  • Ada Jansen

    () (Department of Economics, University of Stellenbosch)

  • Cobus Burger

    () (Department of Economics, University of Stellenbosch)

  • Eldridge Moses

    () (Department of Economics, University of Stellenbosch)

  • Hassan Essop

    () (Department of Economics, University of Stellenbosch)

Abstract

A policy of free basic services (water, sanitation and electricity) was introduced by the government in 2000 to provide basic services to households unable to afford these services. The policy allows for six kilolitres of water free monthly to all households, irrespective of household size or demographics. The assumption was that water consumption is relatively insensitive to the tariff structure, thus alternative tariff structures were applied to obtain the same amount of revenue for unchanged consumption. Aggregate costs of water consumption of R3.8 billion in 2006 by households with piped water were relatively small compared to social spending of about R177 billion. In comparison to a fixed price structure, the gains from the actual tariff structure were quite small for most households who benefited. The net gains of the poorest 40% of households of R61 million per year from the IBT plus Free Basic Water was quite small when compared to social spending of R88 billion to their benefit. The analysis illustrates the limitation of redistributive policies at municipal level. Those who gain are more often in the middle of the national income distribution, although they are the poorer members of the urban population.

Suggested Citation

  • Servaas van der Berg & Ada Jansen & Cobus Burger & Eldridge Moses & Hassan Essop, 2009. "The fiscal incidence of provision of free basic water," Working Papers 11/2009, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers83
    as

    Download full text from publisher

    File URL: https://www.ekon.sun.ac.za/wpapers/2009/wp112009/wp-11-2009.pdf
    File Function: First version, 2009
    Download Restriction: no

    References listed on IDEAS

    as
    1. Milanovic, Branko & Lindert, Peter & Williamson, Jeffrey, 2007. "Measuring Ancient Inequality," MPRA Paper 5388, University Library of Munich, Germany.
    2. Feinstein, Charles, 1988. "The Rise and Fall of the Williamson Curve," The Journal of Economic History, Cambridge University Press, vol. 48(03), pages 699-729, September.
    3. Feinstein,Charles H., 2005. "An Economic History of South Africa," Cambridge Books, Cambridge University Press, number 9780521616416, March.
    4. Jane Fry & Tim Fry & Keith McLaren, 2000. "Compositional data analysis and zeros in micro data," Applied Economics, Taylor & Francis Journals, vol. 32(8), pages 953-959.
    5. Morrisson, Christian, 2000. "Historical perspectives on income distribution: The case of Europe," Handbook of Income Distribution,in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 4, pages 217-260 Elsevier.
    6. Chen, Chau-Nan & Tsaur, Tien-Wang & Rhai, Tong-Shieng, 1982. "The Gini Coefficient and Negative Income," Oxford Economic Papers, Oxford University Press, vol. 34(3), pages 473-478, November.
    7. Keen, Michael, 1986. "Zero Expenditures and the Estimation of Engel Curves," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(3), pages 277-286, July.
    8. Feinstein,Charles H., 2005. "An Economic History of South Africa," Cambridge Books, Cambridge University Press, number 9780521850919, March.
    9. Ewout Frankema, 2010. "The colonial roots of land inequality: geography, factor endowments, or institutions?," Economic History Review, Economic History Society, vol. 63(2), pages 418-451, May.
    10. Willem Boshoff & Johan Fourie, 2008. "Explaining ship traffic fluctuations in the early Cape settlement: 1652–1793," Working Papers 01/2008, Stellenbosch University, Department of Economics.
    11. Champernowne, D G, 1974. "A Comparison of Measures of Inequality of Income Distribution," Economic Journal, Royal Economic Society, vol. 84(336), pages 787-816, December.
    12. Boshoff, Willem H. & Fourie, Johan, 2010. "The significance of the Cape trade route to economic activity in the Cape Colony: a medium-term business cycle analysis," European Review of Economic History, Cambridge University Press, vol. 14(03), pages 469-503, December.
    13. Kuznets, Simon, 1973. "Modern Economic Growth: Findings and Reflections," American Economic Review, American Economic Association, pages 247-258.
    14. David McKenzie, 2005. "Measuring inequality with asset indicators," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(2), pages 229-260, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Publicly provided goods; National government expenditure;

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • H5 - Public Economics - - National Government Expenditures and Related Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sza:wpaper:wpapers83. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Melt van Schoor) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/desunza.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.