Affordability of water services is a pressing water policy issue for both the developed and in
particular the developing world. Despite its well-known theoretical shortcomings affordability
analysis for water supply is up to now widely based on the ratio of a household’s water expenditure
and income (CAR). However in the housing sector alternative concepts of measuring affordability
have been developed among them the potential affordability approach (PAA) and the residual
income approach (RIA).
Against this background the article compares three prominent affordability measures (CAR, PAA,
RIA) on the basis of an empirical case study of a ‘ger’, i.e. low income area in the Mongolian city
of Darkhan using household data from a survey conducted in 2009. Thus we gain insight into both
the water-related affordability situation of people in Mongolia checking the World Bank’s thesis of
missing affordability problems in this country as well as the comparative functionality of different
affordability measures. Additionally, institutional as well as access-driven problems of water
supply are introduced into the analysis. It is shown that affordability problems quite occur for
considerable parts of the households but have to be distinguished depending on the economic
causation: We argue that none of the regarded measures gives a satisfyingly contoured notion of
affordability properly distinguished from the adjacent problems of poverty and access. A mere
CAR analysis does not provide sound recommendations for water policy at all. In particular,
problems of access entailing non-pecuniary costs of water provision have to be taken into account
and might explain both problems of underconsumption and given CAR-affordability at the same
time.