In our previous blog post, we’ve shared the highlights of the Korea Water and Wastewater Association (KWWA) report on the country’s successful transformation of its water sector.
The country has rapidly and substantially increased the coverage of its water pipeline, wastewater treatment, and sanitation from 1960 to 2012.
Korea’s water sector transformation is an example for other countries that want to improve their water services.
This blog post is based on the study that Taehyeom Kim and colleagues from the School of Environmental Engineering, the University of Seoul, published in July 2016.
Aging pipelines has increased pressure on water infrastructure in Korea. Aging pipelines are prone to failure causing service disruptions and financial losses.
The increasing number of aging pipelines in Korea and the limited budget for pipe rehabilitation and replacement (2.4 trillion KRW is invested in local water utilities in a period of 12 years, 18 trillion KRW is needed to rehabilitate or replace all aging water pipelines) necessitates the application of infrastructure asset management.
In the 1960s, Korea’s rapid economic growth has accelerated the construction of its water infrastructure. The expansion of its water infrastructure has also increased public water supply use from 16.8% in 1960 to 99.3% in 2019.
Six decades have passed since the construction of these water pipes, which means that many of the country’s water pipes are at the end of their lifespan.
Pipe breaks increased, which caused services disruption and water loss of 690 million tons per year. Additionally, 33% of Korea’s water pipes are expected to deteriorate in ten years.
To address the budget limitation, the national financing program that the government set up to fund pipe rehabilitation and replacement require local water authorities to implement water infrastructure asset management.
The adoption of IAM will allow local water authorities to manage infrastructure based on “data-driven risk assessment” to provide the expected level of service to customers and as a long-term funding strategy to provide affordable and sustainable water supply services.
According to the researchers, the implementation of IAM delivers direct and indirect benefits. The direct benefits include “measurable cost reductions achieved by decreasing water loss, repair to damage, and service disruptions”. While “improved customer satisfaction in response to the improved level of service” constitutes its indirect costs.
South Korea’s government recommended 103 of its counties and cities out of 161 local governments to adopt a water infrastructure asset management system as an accompanying measure to its aging pipeline replacement program.
The study measured customers’ willingness to pay for improved water supply service by adopting a water infrastructure asset management system.
960 respondents from 24 counties were asked if they were willing to pay the additional charge provided that the adoption of water infrastructure asset management leads to service improvement.
Results show that at an individual level, almost all respondents (92.33%) were willing to pay for improved water supply services based on asset management implementation.
A decreasing water supply service performance at a county level resulted in a low willingness to pay, indicating a need for government intervention for improved services.
The willingness to pay of respondents is contingent on their satisfaction with the levels of service received, water rates, and production, providing a quantitative basis for prioritizing and allocating national subsidies to implement water infrastructure asset management.
Therefore, “poorly performing utilities, which are destined to be in a vicious cycle of poor water supply services without proper interventions, should be highly prioritized during budget and financial planning to adopt and implement water infrastructure asset management.”
The result of the study demonstrates the benefits of applying infrastructure asset management to water utilities.
It significantly improves water supply services that raise customer satisfaction and willingness to pay, efficient strategy for long-term funding of water infrastructure, optimize investment, especially when funds are limited and offers a systematic process of managing and operating assets in the most cost-efficient way.
Click the link below to read further about the study:
[…] the upkeep or rehabilitation of infrastructure is a common problem among governments. Implementing infrastructure asset management (IAM) can help manage these assets to continue to provide services within their expected life or […]