2000 Global: Urban Poor Pay for Water: Evidence and Implications for Going to Scale
Author: Nigam, A.; UNICEF NYHQ
Much of the debate on cost-recovery in water and sanitation has centred on whether the poor should or should not pay for these services - indeed the title of the paper is derived from some lessons learned in the sector. This debate has recently moved from the realm of economics to human rights and the interactions between the two. Useful as these debates are in laying down certain principles, ultimately the practical aspects of implementation and resource constraints will determine what is workable in a country-specific setting for achieving the basic need of safe drinking water and sanitation.
Purpose / Objective
The paper questions why the many experiences and models which show that the poor are willing to pay for water have not gone to scale.
This review undertakes a broad-ranging survey and analysis of water supply and sanitation experiences worldwide with the goal of identifying lessons relevant to their design and evaluation.
Key Findings and Conclusions
The findings suggests that the replication should be of the principles of cost recovery rather than of the models themselves. Some of the principles that work are community collection of tariffs and community responsibility in the management of the facilities. In this regard the lessons from micro-credit of peer pressure and women as managers of water committee are useful for going to scale.
In arriving at some measure of agreement on the appropriate tariffs and subsidies, the paper argues that their design must meet the considerations of value for money, equity and partnerships. Success in going to scale is critically dependent on the institutional structure, including community driven mechanisms, within which tariffs and subsidies are designed.
Lesson 1 Willingness to pay does not mean that the household necessarily has the capacity to pay the full-cost of water supply i.e. there is a trade-off between water as an 'economic good' and water as a 'social good'.
Lesson 2 The high rates paid by the poor for poor quality service cannot easily be transformed into lower rates for better quality services. The case study evidence on willingness to pay is not easily replicable without the poor being provided acceptable levels of services at equitable costs to that provided to the rich within effective institutions or community initiatives.
Lesson 3 Despite evidence of significant private sector participation in water services in developing countries, these efforts are small, in relation to the capital needs. Ultimately the government will remain the major source, and carry the major responsibility, for financing the capital investment needed for improved water supply.
Lessons 4 Going from informal service delivery, through private water sellers, to more formalised systems, and to scale, through either the public sector or formal private sector, raises issues of the human right to water, public good nature of water, obligations of government, and appropriate institutional mechanisms. These issues lie in the political domain but need to be resolved in national policies.
Lesson 5 Equity in access and tariff structures must be an important consideration in designing cost-recovery mechanisms in water, if the service is to be effective.
Lesson 6 Partnerships are critical for the development of effective system of tariffs and subsidies in water and sanitation in developing countries -partnerships between the beneficiaries, the community, NGOs, the water utility, and local and national institutions.
The successful case studies of tariffs and subsidies, and community-managed schemes are by-and-large short-term solutions - although this short-term maybe very long indeed. While alleviating the immediate demand for water in poor urban areas, more long-term solutions and taking the lessons learned to scale should be pursued with equal vigour and the required level of resources devoted to this effort. An efficient and effective system of tariffs and subsidies requires investment in the appropriate infrastructure for the urban-poor, and building of institutions based on the principles of value for money, equity and partnerships. In the long run, institutions should be promoted which are a partnership between consumers, their community, local government, and the private sector. The private sector may have a major role to play in the management of such institutions but in partnership with the community.
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