Estimation of non-tap water demand in Central American cities

We study water demand among non-tap households in three cities in El Salvador and in marginal barrios in Tegucigalpa, Honduras, using data from identical household studies in the four cities. We estimate water demand functions separately for El Salvador and Tegucigalpa, using a two-step procedure. We find non-tap water demand elasticities with respect to total water cost (defined as the sum of water price and hauling cost) of between −0.4 and −0.7. We discuss implications of the results, for welfare and distributional analysis, for documentation of the value of adding new connections, and for general water sector planning.