Blantyre has insufficient water to meet demand. The average daily demand of 140 million litres per day vastly outpaces the Blantyre Water Board’s (BWB) maximum supply of 122 million litres per day. Taking into account 40% water losses prior to consumption, the shortfall between water supply and demand is more than 70 million litres per day. While there is a high level of access to formal water service, this shortfall contributes to unreliable and intermittent service provision. Unreliable water leads consumers to engage in costly coping strategies such as installing boreholes, storing water in buckets and reservoirs, travelling to the next nearest source, or in the case of industry and business, loss of output. The primary recommendation of the paper is to pursue a combination of two interventions: The development of a new water source from the Shire River and a roll out of the E-Madzi program (automated water kiosks) to Blantyre. The combined intervention yields 3.2 kwacha for every kwacha invested, higher than either intervention alone. However, the analysis shows that the BWB should wait until the new supply is fully implemented, and that a sufficient proportion goes to informal settlements, before considering any rollout of E-Madzis. The benefits of the e-Madzis investment are greater the more water that is supplied to kiosks, reducing wastage, water operating costs and waiting time. The paper confirms the economic rationale for pursuing the Blantyre Water Board’s proposed development of a new water source from the Shire River, which will increase Blantyre’s water supply by approximately 230 million litres per day sufficient to meet the city’s needs until 2036. The intervention is costed at MWK 122,925 million in upfront investment and recurrent costs of MWK 17,865 million rising to MWK 33,708 million. The benefits of the new water supply would be substantial, equivalent to 0.6% of Malawi’s GDP. Overall, for every kwacha invested, this intervention alone would yield 2.8 kwacha in benefits and rises to 3.2 if implemented along with E-Madzi.
