…… an exchange of e-mails between two TASTE staff :

Andy, can you check a calculation for me, please?

I was explaining to Rotary Club that water bought in Nigeria from a vendor costs 12 times what I pay from Yorkshire Water. But when we factor in that many of our Nigerian ‘clients’ are subsistence farmers living on $1 per day and we earn vastly more than that, the cost of water rises to frightening proportions.

When I finished speaking, a statistician in the audience had calculated that the price of water for poor families in Nigeria equated to the average household in UK receiving an annual water bill for £138,000.

That is an astonishing way of making a point but is his answer accurate?

You are the economist – help!

Steve

 

“Hi Steve,

You’ve set a really tough maths question there – perhaps your future lies in a career writing GCSE exam papers!

Anyway, for argument’s sake, let’s assume that an average UK water bill is £163 (that’s according to OFWAT).

If a litre of Nigerian street vendor water costs 12 times a litre of water in the UK and a typical Nigerian household consumes the same amount of water as a typical British household, then they would have to pay £1,956 per year. At current exchange rates, this equates to $3,214.

If the total household income is $1 per day, its annual income is clearly $365. This means that their water bill is 8.81 times their total income.

The average British household earns £30,000 per year. If we had to pay 8.81 times our income for water, this would indeed equate to about £264,300. Of course, nobody is able to spend more than their total income on water. Therefore, a poor Nigerian family would have to consume only a fraction of the water that a typical British family consumes.

But, if you think about it, if we only paid for the water we actually drank (or even used for cooking or making tea), our water bills would be much lower.

Here’s another way of looking at it. A British household that earns £30,000 per year and spends £163 on water is spending just 0.5% of its income of water (i.e. the other 99.5% of our income is free to spend on other things such as food, clothes, housing, leisure goods etc.). It would be interesting to find out how much a Nigerian family that earns N100 per day spends on water. Maybe N20 per day? In any event, it would be much more than 0.5% of N100 (less than N1).

So, poor Nigerians are spending a much higher proportion of their family budget on water than we are, and using much less water per day than we do.

It just goes to show why we take water for granted and Nigerians don’t.

I hope this is helpful.

Andy

Copyright © 2017 Taste