Affordability of water supply in Mongolia: empirical lessons for measuring affordability

Affordability of water services is a pressing water policy issue for both the developed and, in particular, for the developing world. Despite its well-known theoretical shortcomings, affordability analysis of water supply has, up to now, been widely based on the ratio of a household's water expenditure to its income, the Conventional Affordability Ratio (CAR). However, in the housing sector, alternative concepts for measuring affordability have been developed, among them being the ‘Potential Affordability Approach’ (PAA) and the ‘Residual Income Approach’ (RIA). Against this background, this paper compares these three prominent affordability measures (CAR, PAA, RIA) on the basis of an empirical case study of a peri-urban, low-income area in the second largest Mongolian city of Darkhan, using household data from a survey conducted in 2009. Thus we gain insight into both the water-related affordability situation of people in Mongolia, checking the World Bank's finding of an absence of water affordability problems in peri-urban areas in the Mongolian capital Ulaanbaatar, as well as into the comparative functionality of different affordability measures. It is shown that affordability problems do occur but have to be distinguished depending on the economic causation. We argue that none of the regarded measures give a satisfyingly contoured notion of affordability properly distinguished from the adjacent problems of poverty and access.