Simplifying the Water Poverty Index

In this paper, principal components methodology is used to derive simplified and cost effective indexes of water poverty. Using a well known data set for 147 countries from which an earlier five-component water poverty index comprising of Resources, Access, Capacity, Use and Environment was constructed, we find that a simplified three-component composite index comprising of Access, Capacity, and Environment, with unequal weights, or its two-component counterpart comprising of Capacity and Environment with equal weights, would be more cost-effective to construct without much loss of information. These simplified indexes have high positive and negative correlations with the Human Development Index and the Human Poverty Index, respectively.