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122 Pages·2015·11.3 MB·English

Do Private Water Tankers in Bangalore Exhibit "Mafia-like" Behavior?
ARCHNES
By
MASSACH 'ETT S -1TmJTE
OFI TLCHNOLOGY
Anirudh Rajashekar
JUN 29 2015
BA in Economics and History
Amherst College
LIBRARIES
Amherst, MA (2010)
Submitted to the Department of Urban Studies and Planning
In partial fulfillment of the requirements for the degree of
Master in City Planning
At the
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
June 2015
Anirudh Rajashekar. All Rights Reserved.
The author hereby grants to MIT the permission to reproduce and to distribute
publically paper and electronic copies of this thesis document in whole or in part in
any medium now known and hereafter created.
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Author
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Department of Urban Studies and Planning
(Date of signing)
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Certified by
Professor Bishwapriya Sanyal
Department of Urban Studies and Planning
/ Thesis Supervisor
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Certified by
Professor Dennis Frenchman
Department of Urban Studies and Planning
Chair, MCP Committee
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Abstract
Do Private Water Tankers in Bangalore Exhibit "Mafia-like" Behavior?
By
Anirudh Rajashekar
Submitted to the Department of Urban Studies and Planning
on May 21, 2015 in partial fulfillment of the
requirements for the degree of Master in City Planning
While there is an increasing acceptance in academic literature about the importance
of informal water delivery in cities around the developing world, public opinion is
often divided. Many citizens see informal water vendors as businesses controlled by
extortionary "mafias" and call for government regulation. This thesis explores
whether government regulation is justified in the case of Bangalore, India where
water issues have become increasingly pressing and informal water vendors, also
known as the "water mafia," have grown in number and in influence. In particular,
this thesis will explore whether private tankers display any form of anti-competitive
behavior by addressing two questions: 1) Do private water tankers exhibit
monopoly power, and 2) Do private water tanker prices vary depending on the
characteristics of the customers they serve? Evidence collected in July-August 2014
and January 2015 indicates that tankers do not operate in an anti-competitive
manner and that government intervention is not justified on these
grounds. However, tankers do contribute to declining groundwater levels and
government intervention on these grounds ought to be explored.
Thesis Supervisor: Bishwapriya Sanyal
Title: Ford International Professor of Urban Development and Planning
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Acknowledgements
I might be echoing the sentiments of many masters thesis writers when I say that I find it
slightly strange writing acknowledgements for what might just as well amount to a personal
project. Nevertheless, this has meant a lot to me and I have been fortunate throughout the
last year to have met countless individuals who have helped me tremendously along the
way.
I would first like to thank my thesis advisor, Professor Bish Sanyal, for his guidance and
help. I would have found it very difficult to complete this project without his flexibility and
support. At MIT, I would like to thank Professor Gabriella Carolini for her advice and for so
carefully reading through this thesis. I would also like to thank Professor Eran Ben Joseph
for completing a lot of necessary paperwork on very short notice. MISTI-India generously
provided funding over the summer of 2014 and the winter of 2014. I am also grateful to the
DUSP Emerson grant for helping me fund my winter travels. Finally, I would like to thank
Dr. Jenny Gronwall and Professor Malini Ranganathan for speaking to me, sharing papers,
and also advising me on some key ideas I had previously overlooked.
In Bangalore, I would like to thank a whole host of different planners and policymakers for
giving me their time and for patiently listening to my thoughts and ideas. First, the Indian
Institute of Management Bangalore-Century Real Estate Initiative has been extremely
helpful, and I am especially grateful to Dr. Madalasa Venkataraman for her support and
guidance in helping me with the design and dissemination of my surveys and with my
statistical analyses. Santosh was also very kind in helping me translate surveys into
Kannada. I am also grateful to Professor Deepak Malghan for his thoughts and support
during the initial stages of my research. S. Vishwanath; Anu and Bindu at NextDrop; and
Meera, Shree, Ganga, and Shiva at Citizen Matters were also incredibly supportive. I would
like to thank all those I met at the BWSSB, RTO, Central Groundwater Board, and
Department of Mines and Geology for their time and their willingness to share thoughts and
data. And finally I would like to thank all my survey respondents and all the private tanker
operators I interviewed for their time, their honest responses, and their patience.
I would like to thank my family - my father, aunt, grandmother, and sister - but especially
my mother for driving me around Bangalore and for translating and speaking to all those
water tankers on my behalf. This is a testament to her work as much as it is to mine. I
would also like to thank my friends at home and at MIT, and especially Vishnu and Hector,
for reading through the project and offering helpful suggestions and comments. And last
but not least, I would like to thank Mikia for her unwavering support, careful editing, and
constant companionship.
While all of this is only a quick examination of Bangalore's water issues, I do hope it can
serve as a springboard for future exploration. Bangalore is an incredible city in the middle
of some testing times and I hope that I have given back a little to the city of my childhood
with this thesis.
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Table of Contents
ABSTRACT 3
ACKNOWLEDGEMENTS 5
TABLE OF CONTENTS 7
LIST OF FIGURES 9
LIST OF TABLES 9
ACRONYMS 10
CHAPTER 1: INTRODUCTION 12
To CENTRALIZE OR TO DECENTRALIZE? 15
SMALL PRIVATE SECTOR PROVIDERS OF WATER (SPSP) 15
NETWORKS 18
ECONOMICS OF WATER: SHIFT FROM PUBLIC TO PRIVATE 20
GROWING ACCEPTANCE OF INFORMAL VENDORS 23
ARGUMENTS FOR PUBLIC INTERVENTION 25
THE TROUBLE WITH TANKERS 26
RESEARCH AIMS 26
SUMMARY OF FINDINGS 27
IMPACT AND LIMITATIONS 28
CHAPTER OVERVIEW 30
CHAPTER 2: METHODOLOGY 32
CHAPTER 3: GROWING PAINS 39
BANGALORE PLANNING AUTHORITIES 42
ENTER THE "WATER MAFIA" 50
CHAPTER 4: PHASE I - TANKERS AND MONOPOLY POWER 53
THE BUSINESS OF TANKING 54
OVERVIEW 54
BREAKDOWN OF TANKER PROFITS 57
PROFITS AND PRICE-COST MARGINS 60
BARRIERS TO ENTRY AND ECONOMIES OF SCALE FACTOR 64
LERNER INDEX OF MONOPOLY POWER 66
HOW DO TANKERS EARN A PROFIT? 68
SUMMARY 70
CHAPTER 5: PHASE II - TANKERS AND PRICE DISPERSION 72
PRICES AND CLUSTERING ACROSS THE CITY 74
WHAT DETERMINES A TANKER'S PRICE? 76
MODEL 1: ORIGINAL MODEL 77
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MODELS 2 AND 3: INTERACTIONS 78
MODEL 4: INCLUDING SOCIOECONOMIC MEASURES 80
MODELS 5 AND 6: INCLUDING SUPPLY SIZE VARIABLES 82
MODEL 7: ROBUSTNESS USING INSTRUMENTED VARIABLE (IV) 83
SUMMARY 85
CHAPTER 6: CONCLUSION 88
SUMMARY 88
GROUNDWATER EXTRACTION AND THE ENVIRONMENT 89
GROUNDWATER REGULATIONS 91
POLICY RECOMMENDATIONS 93
AREAS FOR FUTURE RESEARCH 97
REFERENCES 99
APPENDIX A - WATER TANKER SURVEY 105
APPENDIX B - DOMESTIC USERS SURVEY 106
ENGLISH 106
KANNADA 110
APPENDIX C - NON DOMESTIC USERS SURVEY 115
APPENDIX D - MODELS 118
MODEL 1 120
MODEL 2 121
MODEL 3 121
MODEL4 121
MODEL 5 122
MODEL 6 122
MODEL 7 (IV) 122
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List of Figures
FIGURE 1: BANGALORE AND ITS SOURCES OF W ATER ................................................................................................................ 14
FIGURE 2: M AP OF SURVEYED TANKERS......................................................................................................................................34
FIGURE 3: M AP OF SURVEYED APARTMENTS ............................................................................................................................... 36
FIGURE 4: M AP OF SURVEYED MALLS ........................................................................................................................................... 37
FIGURE 5: BANGALORE URBAN EXPANSION ............................................................................................................................... 40
FIGURE 6: W ATER SUPPLY.............................................................................................................................................................45
FIGURE 7: BW SSB PIPES...............................................................................................................................................................46
FIGURE 8: BW SSB COVERAGE ...................................................................................................................................................... 49
FIGURE 9: TANKERS & TANKERS PER H H BY W ARD.................................................................................................................55
FIGURE 10: OVERVIEW OF TANKER OPERATIONS ..................................................................................................................... 56
FIGURE 11: NUMBER OF TRIPS PER DAY AND AVERAGE DISTANCE PER TRIP ................................................................... 60
FIGURE 12: TANKER PRICES..........................................................................................................................................................61
FIGURE 13: TANKER PRICES ACROSS BANGALORE ..................................................................................................................... 74
FIGURE 14: TANKER PRICES FOR CONSUMERS WITH DIFFERENT LEVELS OF WATER ACCESS ......................................... 76
FIGURE 15: LOGGED TANKER PRICE FOR CONSUMERS WITH AND WITHOUT BWSSB CONNECTIONS..........................80
FIGURE 16: LOGGED TANKER PRICE FOR CUSTOMERS WITH AND WITHOUT BORE WELLS.............................................80
FIGURE 17: PRICE OF NEW LY CONSTRUCTED APARTMENTS................................................................................................ 81
FIGURE 18: DEPTH TO GROUNDW ATER 1974-1975,2008-2009 IN METERS ............................................................ 90
List of Tables
TABLE 1: TYPOLOGY OF SPSP OPERATIONS ............................................................................................................................... 17
TABLE 2: TABLE OF INTERVIEW EES..............................................................................................................................................38
TABLE 3: TANKER CAPACITIES......................................................................................................................................................58
TABLE 4: TRUCKS & EMPLOYEES..................................................................................................................................................59
TABLE 5: NUMBER OF TRIPS PER DAY AND DISTANCE PER TRIP ......................................................................................... 60
TABLE 6: ESTIMATED TANKER COSTS & REVENUES (N=25) ............................................................................................. 63
TABLE 7: TANKER COSTS VS. BW SSB COSTS...............................................................................................................................68
TABLE 8: DETERMINANTS OF PRIVATE W ATER TANKER PRICES ....................................................................................... 85
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Acronyms
Organizations/Agencies
BBMP Bruhat Bangalore Mahanagara Pallike
BDA Bangalore Development Authority
BWSSB Bangalore Water Supply and Sewerage Board
CBWB/ CBWA Central Groundwater Board/ Authority
DMG Department of Mines and Geology
IIM-B Indian Institute of Management, Bangalore
IISc Indian Institute of Sciences, Bangalore
KIADB Karnataka Industrial Areas Development Board
LDA Lakes Development Authority
PCB Pollution Control Board
RTO Regional Transportation Office, Karnataka
Commonly used terms and definitions
Borewell Borehole
Cauvery water Municipal water pumped and managed by the BWSSB utility
KLD Kiloliters per day
LPCD Liters per capita per day
MLD Million liters per day
NRW Non-Revenue Water
SPSP Small Private Sector Provider
Tanker Private water vendor
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