New development: The high cost of the free rider in public water services in developing and emerging economies

IMPACT

This article explains the importance of quantifying the negative monetary impact that free rider behaviour has on society, focusing on the management of the provision of a public water service to homes. The findings can be replicated in other countries and serve as an important input in the design of public policy in the public sector.

ABSTRACT

The problem with free riders in piped water services greatly affects society generally in terms of the finances of water management organizations (WMOs). In Mexico, this impact can range from USD 513–739 million per year and could represent between 40­–60% of the investments made in the sector. Society generally, governments and WMOs must become aware of and/or take public policy measures to guarantee better services and address the free rider problem.

KEYWORDS:

• Cost
• equity
• free rider
• Mexico
• piped water services
• water utilities

Acknowledgements

The article was prepared with the technical and financial support of the National Council for Science and Technology (CONACYT in Spanish) through the CONACYT Chairs Program N° 1812: Economic and Water Model Project for the Valley of Mexico Basin.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Daniel A. Revollo-Fernández

Daniel Revollo is a Research Professor in the Department of Economics at the Universidad Autónoma Metropolitana (UAM), Mexico City. His research interests include environmental economics and sustainable development.