From borehole to tap: economic determinants of the sustainability of drinking water investments in a semi-arid region of south-western Madagascar

Drinking water investments in arid developing regions fail at a high rate. The most neglected link is the physical transfer from borehole to tap. We analyse the determinants of network efficiency, the ratio of distributed to injected volumes, and its effect on financial sustainability. We use a monthly panel of 20 piped water schemes in south-western Madagascar (180 scheme-months, 2024 to 2026), matched with 166 borehole records and district investment amounts. Two equations are estimated with four panel estimators, arbitrated by the Hausman test. The chain loses a median 18.6% of volumes, 11.2% within the network; average efficiency is 83.8%, and the bottom quartile loses over 28%. Efficiency is higher where water is costly to extract: each additional metre of borehole depth adds one efficiency point (P < 0.01), and efficiency rises within schemes as private connections densify (+12.9 points per doubling; P < 0.10). Scarcity disciplines loss management; metering makes it possible. Across schemes, efficiency predicts cost recovery (+0.84 points per efficiency point; P = 0.052), whereas initial investment has no detectable effect. This challenges the CapEx-centred project model. We recommend maintenance funds and efficiency targets set at the design stage, standardised pumping technologies, and monthly loss monitoring.