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Good case study. Note that the industry term is "non revenue water" more than "unaccounted for water" -- that's because NRW includes water that's delivered but not paid for.
For a LDC success in privatization, see http://cmsdata.iucn.org/downloads/phnom_penh_waterfinal.pdf
For the challenge of moving to meters in England/Wales, see:
Note that Chile deals with affordability, if I recall right, by showing "eligible poor" how much they'd pay but then reducing the bill (I've also heard they give income transfers and all households pay full cost).
I have a quarrel with the first practice question. There was a drop in investment as a result of a dispute the government and the service provider about rate setting. I understand that there was an influx of new capital initially, but that doesn't mean that everything stayed that way. Was there a net increase in investment? It appears so, but that increased investment was not consistent.
Has there been any research on how the water quality has changed since the system went back under public ownership?
Tyler, regarding what you said in the "moral intuitions" minilecture. Now in the case of BA -- as a complete outsider to this situation -- it seems to me you can satisfy both the "water for everyone" and the cost realities with a "penalty". Give everyone free up to a certain amount, and then those with usage levels more like they have a washing machine or a garden, pay a penalty -- or call it whatever you want.
Exactly the same mathematical structure as the Rabushka flat-tax structured on EconTalk: constant, then linear (kinked). The average of these two makes a smooth-ish curve.