NEW GLOBAL VISION COLLEGE

DETERMINANTS OF HOUSEHOLD WATER DEMAND IN CASE

OF ADDIS ABABA, ETHIOPIA
A RESEARCH PROPOSAL SUBMITTED TO THE DEPARTMENT OF
FACULTY OF BUSINESS AND ECONOMICS DEPARTMENT OF
MANAGEMENT BUSINESS ADMINSTRATION PROGRAM {MBA}

GROUP ASSIGNMENT

SECTION - E
BY: Tizita Mulatu ……….…0470/15

SUBMITTED BY: Dr. YILKAL

MAY 2023

A.A, ETHIOPIA

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Table of Contents Page
CHAPTER ONE.............................................................................................................................................................1
1. INTRODUCTION......................................................................................................................................................1
1.1Background of the study........................................................................................................................................1
1.2 Statement of the problem......................................................................................................................................1
1.3 Objectives of the study.........................................................................................................................................2
1.3.1 General objectives.........................................................................................................................................2
1.3.2 Specific objectives........................................................................................................................................2
1.4. Significance of the study.....................................................................................................................................2
1.5. Scope of the study...............................................................................................................................................2
1.6. Limitation of the study........................................................................................................................................3
CHAPTER TWO............................................................................................................................................................4
2. Literature review.........................................................................................................................................................4
2.1 Theoretical literature review.................................................................................................................................4
2.1.1 Definition of water........................................................................................................................................4
2.1.2 The water supply system...............................................................................................................................5
2.2. Factors affecting house hold water consumption................................................................................................5
2.2.1. Physical and demographic factors................................................................................................................5
2.2.2. Socio - economic factors..............................................................................................................................6
CHAPTER THREE........................................................................................................................................................8
3. RESEARCH DESIGN AND METHODE..................................................................................................................8
3.1 Description of the study area................................................................................................................................8
3.1.1 Water supply problems in the city................................................................................................................8
3.2 Methodology.........................................................................................................................................................8
3.2.1 Type and source of data................................................................................................................................8
3.2.2 The sample design.........................................................................................................................................9
3.2.3 Data collection techniques............................................................................................................................9
3.2.4 Model specification.......................................................................................................................................9
3.2.5 Variables in the model, descriptions and expected sign...............................................................................9
3.2.6 Method of data analysis..............................................................................................................................10
3.3. Empirical results and discussion.......................................................................................................................10
3.4. Descriptive analysis...........................................................................................................................................10
4. CONCLUSION.........................................................................................................................................................11
5. RECOMMENDTION...............................................................................................................................................11
6. BIBLOGRAPHY OR REFERENCES....................................................................................................................12
7. TIME SCHEDULE.................................................................................................................................................13

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CHAPTER ONE

1. INTRODUCTION

1.1Background of the study

Safe drinking water is an essential component of primary health care and has a vital role in
poverty alleviation. There is a positive correlation between increased national income and the
proportion of people with access to improved water supply. According to World Bank (1994) a
0.3% increase of investment in house hold access to safe drinking water generates 1% increase in
GDP. Unreliable supply and shortage of water affects life of human beings in various ways.
According to WHO (2010) progress report on sanitation and drinking of six billion people on
earth, 884 million did not get their drinking water from safe sources and almost all of them live
in developing regions. For instance in sub sharan Africa only 60% of the total population in the
sub-continent is using improved sources of drinking water. Ethiopia like any other developing
countries has many constraints to make potable water easily accessible. Only 38% of the total
population and 26% of the rural population have access to safe and clean water (WHO and
UNICEF, 2010).

In Ethiopia, when we trace back to its establishment, the supply of pure water through pipe was
started during the era of Aste Menelik. In Addis Ababa, which is the capital city of Ethiopia, to
the supply of pure water through pipe was started in 1949. Since the population of the city is
expanding from time to time, it demands the supply of more pure water. To cope with such an
expanding demand the city established an institution called Addis Ababa water supply and
sewage service. Addis Ababa is facing a cute shortage of water because the demand for water is
by far larger than its supply. The demand side needs a proper management to match with the
supply. This calls for a demand analysis to identify factors affecting house hold water demand in
the city. This is helpful for supply augmentation of expansion of the service among the society.

1.2 Statement of the problem

Access to safe water and sanitation in Ethiopia is among the lowest in sub-sharan Africa and the
entire world. Even if access has increased substantially with funding from external aid, much still

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remains to be done to achieve the MDG’s (Millennium development goals) of halving the share
of people without access to water and sanitation by 2015. In addition to this, effectively spending
them one and ensuring proper operation and maintenances of infrastructure built with these funds
remain a challenge (MOWR, 2004). Since it is difficult to satisfy the needs of the society by
supplying water to all, various methods have been used by the government for reducing water
consumption. Supply augmentation requires several year of planning and large amount of capital
investment before water is available. In light of such challenge, the governments are opting for
strategies that promote water conservation, particularly with residential consumer (Basinaetal,
2008).

1.3 Objectives of the study

1.3.1 General objectives

The general objective of the study is to investigate the determinant of household water demand
in Addis Ababa city.

1.3.2 Specific objectives

In analyzing such a broad objective, the specific objectives to be analyzed include;

 To examine factors which change the consumption pattern of residential water in Addis
Ababa. To analyze major problems related to household water use in the city.
 To examine the socio - economic characteristics of a household in relation to the demand
for water.

1.4. Significance of the study

This study tries to identify the factors which affect household water demand in the city by
collecting information from the households themselves. Demand analysis is very crucial because
it tries to observe the problems from the users’ side. Besides, this paper initiates other
researchers to contribute their turn on this issue.

1.5. Scope of the study

The study is limited to the capital city of Addis Ababa, Ethiopia. The analysis is only based on
questionnaire result and background information is used to describe the region. Water
consumption or demand in industrial, institutional and commercial sector is beyond the scope of
the study.

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1.6. Limitation of the study
While conducting this researcher a number of obstacles were encountered. The first and most
important one is language. This is a constraint because the study is conducted in an area where
the researcher does not know the language spoken by residents. The second one is a financial
constraint occurring because the researcher is a student. The third one is a time constraint. Since
the time given for this study is limited deep analysis is impossible. And lastly the respondent’s
willingness to provide the necessary information will be challenging.

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CHAPTER TWO

2. Literature review
2.1 Theoretical literature review

2.1.1 Definition of water

Water can be deemed as an essential environmental resource. From an anthropogenic
perspective, its most important role lies in human sustenance. Human utilize water directly for
many purpose; municipal water supply, sanitation, irrigation, transportation, industrial water
supply, energy generation (hydro electric) and recreation. Water plays an absolutely necessary
and irreplaceable role in many ecosystem services, such as habitat creation, nutrient cycling, the
hydrological cycle and climate regulation (Butler and Fay yaz, 2006). Water has many unique
characteristic that makes it difficult to trade on regular markets. Exclusive property right cannot
be assigned because of its physical attribute in particular its highly fluid nature and role in the
hydrological cycle. Secondly, water can be utilized as a non-rival good, where ones use does not
preclude another’s use of that resource. Thirdly, due to the large amount of interdependency with
uses of water such as hydro electricity generation impacting recreation, externalities can be
associated. When externalities exist, the full cost of an activity may not be visible or taken into
account by the producer or consumer. Lastly economies of scale in the supply of water lead to
imperfect competition, where limited competition and monopoly supplier can significantly
influence the pricing of good (Ibid).

Since the Dublin conference on water and environment, it is generally accepted among water
resource managers that water should be considered as an economic good. Even if the
terminology is the same it has different interpretations. Based on this there are two schools of
thought. The first school maintaining that water should be priced at its economic value. The
market will ensure that the water is allocated to its best uses. The second school interprets “water
as an economic good” to mean the process of integrated decision making on the allocation of
scare resource, which does not necessary involve finical transaction (IWRA, 2002).

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2.1.2 The water supply system
Water supply is a process or an activity by which water is provided for some use example to
home, factory or business. The stringency of requirement that a supply of water must meet
depends on the use to be made of it. The more usual requirement, however, are that water be free
enough of harmful bacteria, chemicals and other contamination to be drinkable; free of substance
that make its taste or appearance unpleasant; and if the water is to be used for washing, free of
salts of calcium and magnesium that will interfere with the action of soap. (Colombia,
encyclopedia) A complete water supply system is often known as water works. Sometimes the
term is specifically applied to pumping station, treatment stations or storage facilities. Storage
facilities are providing to reserve extra water for use when demand is high and when necessary to
help maintain water pressure. Treatment stations are places in which water may be filtered to
removes us pended impurities or disinfected with chlorine, ozone, ultraviolet light or some other
agents that kills harmful bacteria and micro organisms. Salts of iodine and fluorine, which are
considered helpful in preventing go tier and tooth decay, are sometimes added to water in which
they are lacking (Ibid).

2.2. Factors affecting house hold water consumption

2.2.1. Physical and demographic factors

One of the factors, which affect the use of water within each household, is the physical distance
of housing units from the water point. It is widely known that distance involved in fetching water
is inversely related to per capital consumption of water. Large distance involves considerable
energy and time expenditure, which limits the frequency of fetching and the size of containers
and hence reduces the per capital daily water consumption (Teshome, 2007). A study made by
Mesert in Simde district in Ethiopia suggest that the per capital water use is negative and
significantly determined by the distance of water source from the households (i.e. keeping other
factors constant, as the distance of water source from a household increases, the per capital water
use significantly decreases. This implies that water facilities should be accessible to all segments
of the population to better satisfy daily water requirement of residents. It also shows that
convince of location of water source is a significant determinant of water use at household level.

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2.2.2. Socio - economic factors
Among the enormous socio-economic factor that affect household waters consumption pattern
the most significant one’s are household size, household income, and level of education, monthly
expenditure of a household and profession of a household head.

A. House hold size and level of education when there is an increase in household size, the
probability of collecting more water for large household size than individual household. As a
result there is a positive relationship between household size and total consumption.
However the per capital water consumption decreases with an increase in household size.
When considering the supply necessary to meet the needs of large family, there is a problem
of access and adequacy. This implies that there is a negative relationship between household
size and per capital daily water consumption (mesert.2012, as indicated by Teshome (2007),
the educational level of a household is positively related with the per capital daily water
consumption.
B. Household income and monthly expenditure a study made by Teshome (2007), revealed that
there is a positive relationship between monthly income and per capital daily water
consumption. This result confirms with economic theory which states that an individual’s
demand for a particular commodity depends on his/her income and quantity demanded are
positively related, except in the case of inferior goods. The result of the survey shows that
higher income groups have higher per capital daily water consumption than lower income
group. According to Dessalegn (2012), monthly expenditure of a household was found to
have a positive relation with the per capital daily water consumption of household because
family members of better household are more likely to have frequent bath, showering,
frequent was he so cloth and more water for cooking as compared with worse off household
taking in to consideration the household life style and sanitation preference of better off
household.
C. Sources of water and housing characteristics

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Factor like the size of the house and access to appliance like shower, both rooms, washing
machines all so influence water demand. It is evidenced that house ownership is likely to
increase household’s decision to have private piped connection as a primary source of water and
is likely to increase the daily per capital water consumption. Primary sources of water like
private pipe users have 9liter more daily per capital water consumption than households who use
other sources of water (ibid).

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CHAPTER THREE

3. RESEARCH DESIGN AND METHODE

3.1 Description of the study area
The city of Addis Ababa, located in central highlands of Ethiopia, Addis Ababa is the capital city
of Ethiopia. It is the largest city in Africa, the local place of life and pleasant climate are well
suited to families and professionals, and the stunning scenery and vibrant culture make Addis
Ababa a great place for expats to live. Addis Ababa lies at an elevation of 2355 meters (7726 ft)
and is grassland biome, located at 9°1'48''N 38°44'24''E. the city lies at the foot of Mount Entoto
and forms part of the watershed for the awash. The latitude of Addis Ababa, Ethiopia is
9.005401, and the longitude is 38.763611.

3.1.1 Water supply problems in the city

The water supply in Addis Ababa doesn’t meet demand. Many households, schools and health
institution often lack water and sanitation facilities which have drastic implication for public
health. The key water supply problems in Addis Ababa include water losses and non revenue
water. In 2008 water losses in the distribution system amounted to 4,456m3/day. According to
world bank (2007), approximately 30% of the volume produced in cities like Addis Ababa is not
billed and 25% of what is billed is not paid (Castro,2009).

3.2 Methodology

3.2.1 Type and source of data

The data source of the study is both primary and secondary in nature.

Primary sources
To achieve the objectives of the study a field survey using household questionnaires conducted.
This questionnaire in corporate questions pertaining to socio-economic and demographic aspects,
source of water use, amount of water consumption of household etc.

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Secondary source
The secondary data is obtained from sources including the annual reports of Mwsss and related
literatures.

3.2.2 The sample design

The sample for this study is drawn from three “sub city” in the city from a total of ninth “sub
city”. A multi stage sampling technique is used because the sample selection involves three
basic stages i.e. selection of sample “sub city” at first stage, a sample ‘Woreda’ at the second
stage and a sample household at the third stage which are done randomly. The main criterion for
selection of sample is the water supply situation. Because water supply disparity exists among
“sub city” as well as ‘Woreda’ in the city. Taking the above criteria in to consideration, three
“sub city” out of ninth will be taken for evaluating the factors affecting household water demand
in the city. It is desirable to have a sample that is representative of the study population as much
as possible but limitations, most importantly, in time and cost prohibited the sample size to a
total of 90 households.

3.2.3 Data collection techniques

Background information on the water supply and demand situation in the city obtained from
secondary sources. The primary data is collected by making a household survey in the selected
areas by means of questionnaire.

3.2.4 Model specification

Most of the models that are employed in residential water demand study in both developed and
developing countries are regression model. They typically use the form q=f (p, z) where p is the
price variable and z are other factor so range of shifters of demand such as income, household
demographic and other characteristics like the weather variables etc. In countries where
complete dataset of residential water uses are unavailable from water supply offices, across
sectional data that are collected for sample over individual households at a point in time can be
used for estimating water demand of the household. For this particular study the standard
multiple regressions Model is used to analyze factors affecting daily per capital water
consumption of a household. And the method of ordinary least square is applied for estimating
the parameters of MRM.

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3.2.5 Variables in the model, descriptions and expected sign
Even though there are many variables which affect the pre-capita daily water consumption of a
household this study takes in to account the major variables i.e. Based on review of literature
economic theories so residential water demand and knowledge of the researcher The dependant
variable per capital daily water consumption was obtained by asking the total water consumption
of a household for different uses and dividing it by the total number of people currently living in
the family. For house with private piped water connection, the monthly expenditure on water can
be calculated by using the information in the water bill. For those who did not have such
connections, since they use other water sources (from well, river), the information provided by
the bill is not reliable. So for both household, the average daily water use is estimated by using
bucket, clay jar so plastic jarsi.e.‘jerican’to take water in to the house.

3.2.6 Method of data analysis

The study uses both descriptive and econometric analysis. After obtaining the response of
respondents, the data is described in the form averages and percentages. The statistical software
(STATA 10) is used to analyze and interpret the data econometrically.

3.3. Empirical results and discussion

The information obtained from household water consumption survey can be analyzed in two
ways; by looking at the descriptive statistics of the survey result and using econometric models
to examine the determinants of household water consumption.

3.4. Descriptive analysis

Before getting in to estimation process, it is necessary to summarize the results of the survey. In
this part a brief review of the result of the survey with the help of descriptive statistics will be
presented.

Socio-economic characteristics of the households:

As previously stated a total of 90 household responses were obtained from different areas of
Addis Ababa. Out of the total population 61.1% is male and 38.8% female. The average family
size is 5.0 with a minimum of 1 household member and maximum of 11 household members.
With respect to religion, out of the total population 93.3% is Orthodox, 2.22% is Muslim. There
mining 4.44% are protestant, catholic and others. When the marital status of household is
considered, out of 90 household head 74.4% are married, 12.2% are single, and 8.88% are

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divorced. The average age of the household he aids 41 years with a minimum of 18 years and a
maximum of 95 year.

4. CONCLUSION
An improved and sufficient water supply service is an important thing for economic
development, and its existence enables to have healthy and productive population that has a
great role in increasing the productivity of the economy. In relation to this, access to safe
drinking water varies from community to community because of physical and socio economic
factors. As a result, now a day, a number of people in the world doesn’t have reasonable access
to adequate amount of potable water. Like most of the urban centers’ of developing countries
Addis Ababa, the capital city of Ethiopia, has been experiencing the problem of potable water
supply in a adequate quantity. The major goal of this study is to assess the determinants of house
hold water demand. To accomplish the task; primary as well as secondary data were collected.
Primary data was collected from a total of 90 sample household through questionnaire.
Information obtained from the surrey was analyzed by using descriptive analysis and
econometric model. The descriptive analyze is shows that at present the majority of (42.2%) of
the households obtain water from well where as 26.6% of the households receive water from the
artificial dams built in the city. The sample survey result also indicated that about 75.5% of the
total sample households have private meter connection; where as 5.5% of the households is
using water from private eveners. The other 16.6% and 2.22% are users of public tap and other
type of piped water connections respectively. To assess household water consumption pattern
there searcher used per capital daily water consumption as dependant variable and family size,
educational status of the household head, age of a household head, source of water, distance
from water source and house ownership status of a household. The econometric analysis
indicates that from the six variables, education, total family size source of water and distance
from water sources are statistically significant to affect the per capital daily water consumption
of a household while house ownership and are in significant.

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5. RECOMMENDTION
From the preceding chapters it is clear that they yield of the water source and pipe line network
is not enough to satisfy the needs of the community. This and related factors invite researcher so
such topics and help to recommend ways and means of improving water supply system. Thus,
the following measures should be taken in order to improve water consumption rate of the
community of Addis Ababa.

1. One of the problems of Addis Ababa water supply system is its frequent interruption. Thus,
in order to solve the shortage of water, MWSSS should expand sustainable water supply
project.
2. It is better to constructed as an additional source of water at the time of interruption. And
also the quality of pipe lines and bore holes should be rehabilitated
3. One of the causes for low pre-capital water consumption is high price of tap water from
water sellers. Most of the respondents suggest that the price charged by venders is
fluctuating. Thus to provide adequate water to a large number of people at minimum cost,
MWSSA has to install additional publics and pipes.
4. Since a positive relationship exists between education a level and water consumption, the
MWSSS has to launch strong public awareness and orient the community one economical
use of the available water supply.

6. BIBLOGRAPHY OR REFERENCES
Basania,M.,ishamb,J.relly,B,(2008).The determinant of water connection and water
consumption; Empirical evidence from a Cambodian household survey.

Butler,D and fayyazM.,Eds(2006); water demand management; IWA publishing, lond-and

white,S.,ED,(1998);wise water management; A demand management.

Dessalegn chaine(2012), factors determining residential water demand in north western

Ethiopia. The case of Merawi. Cornell University. Master’s thesis.

International water resource association water international, volume27, number1, pages98-104,

March 2002.

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7. TIME SCHEDULE
Time to be Devoted
No Task/Activity Jan Feb Mar Apr May Jun Jul Aug Sept Nov
1 Proposal
2 Literature
Review
3 Research
methodology
4 Data collection
5 Empirical
finding and
results
6 Progress
presentation
7 Analysis
8 Conclusions/final
presentation

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