Pipes, Taps and Vendors: Managing and Regulating the Unconnected Water Market

Against the background of the human rights to water and the SDG No. 6, vendors play a pivotal role for an IWRM-based water supply system in the future. With the help of a micro-economic model, an optimal modal split is derived, the result of which is that not all households should be served by the pipe-based municipal supply. Instead, the non-connected households should be served by non-mobile or mobile vendors. Furthermore, we analyze different structures in the unconnected market. If vendors compete against each other, the optimal modal split can be replicated. If vendors form a cartel, market interventions, such as a cost related zonal price cap or a subsidizing strategy, are required for preventing the abuse of market power by the vendors.