RP-01638

Economic Analysis and
Potential Markets
Tan Bock Thiam
Of the people in developing countries, 75%
do not have access to adequate supplies of
clean water (IRC 1982). The use of handpumps
in areas where there are adequate
supplies of ground water is the simplest, least
costly method of providing the rural population
with clean water. As increased attention
is paid by governments and international
organizations to the provision of safe sources
of drinking water to the people in the rural
areas, the demand for handpumps in nearly
all developing countries will increase.
The potential market in these countries has
been estimated at 20 million for this decade
(Modern Asia 1982). However, although there
is an obvious demand for handpumps, the
installation rate of these pumps appears to be
hindered by the lack of a pump that can be
maintained easily at the village level. Such a
pump, which is ideally suited for the rural
areas, is described as a village-level operation
and maintenance (VLOM) pump.
The average maintenance cost for handpumps
in East Africa is $4001 per pump per
year (World Water 1982). In some instances,
the maintenance cost accounts for 85% of the
amortized cost of installing a rural-water
supply. Thus, although the use of handpumps
offers a low-cost alternative to the provision
of clean water in rural areas, the high
incidence of pump breakdown and the problem
of providing adequate maintenance deter
the wider use of these pumps in rural areas.
The objectives of this study were threefold:
first, to conduct a financial and economic
analysis of the cost effectiveness of the polyvinyl
chloride (PVC) handpumps being tested
by the International Development Research
1AII costs are in US$. The exchange rates used here
are: US$1.00 = $2.30 Malaysian, P8.50 Philippines,
B23.00 Thailand, and R20.00 Sri Lanka.
Centre (IDRC) network, as compared with
other handpumps in use in these countries;
second, to analyze the sources of water
supply for rural areas and make projections
regarding the percentage of rural households
to be served by piped water by the year 1990;
and, third, to undertake a preliminary assessment
of the market for handpumps for the
next 10 years and assess the potential market
for the handpump being tested by the network
in these four countries.
Some of the information on the cost of the
handpumps was obtained from the project
interim reports. Additional information was
secured using a questionnaire and from
discussions with the project leaders in each of
the four countries. Information on the second
and third objectives of this study was gathered
from interviews with the project leaders,
government officials, and other interested
individuals from various organizations.
One of the major limitations of this study
was the limited time spent in Sri Lanka, Thailand,
and the Philippines. Therefore, it was
possible to obtain only a preliminary assessment
of the overall situation regarding rural
water supply in general, and the role of
handpumps in particular. Nevertheless, with
the active cooperation of each country's
project team and information obtained from
interviews and published sources, it was
possible to arrive at a fair assessment of the
situation prevailing in these four countries.
The cost information available for the
IDRC-PVC pumps was for experimental or
individually fabricated units. Thus, it was not
meaningful to use the data for comparison
with other pumps produced on a large scale.
It was only possible in one country (Malaysia)
to obtain the estimated cost of the PVC pump
if it were to be produced in large quantities.
Thus, a detailed financial analysis was only
carried out for Malaysia because of the Jack of
data from the other countries.
SriLanka
Country Analysis
The project team installed about 21 pumps,
primarily in the southern part of the Island.
Each pump served a cluster of four to five
households or about 30 people. All the pumps
that were installed are still functioning and
they are being maintained by the Sarvodaya
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