Report

2015-05-28

Southern Africa Labour and Development Research Unit

University of Cape Town

Community-based water supply projects in rural South Africa have frequently proved unsustainable, with many communities unable to raise sufficient funds to meet operation and maintenance costs. A key obstacle to cost recovery (and the focus of this paper) is the free rider problem. As rural water services are frequently supplied as a public good, the link between paying for water and receiving it is not as straightforward as it is for private goods, and beneficiaries may have a material incentive to ‘free ride’ on the good’s production. Using a simple game-theoretic model, we identify and discuss the value of social sanctioning in deterring free riding. We conclude that social norms that generate costly punishment, such as norms of fairness may be necessary (but not sufficient) to deter free riding. We emphasise the importance of community mobilisation, social intermediation and institution building in overcoming the free rider problem.