Cost recovery, equity, and efficiency in water tariffs : evidence from African utilities
AbstractWater and sanitation utilities in Africa operate in a high-cost environment. They also have a mandate to at least partially recover their costs of operations and maintenance (O&M). As a result, water tariffs are higher than in other regions of the world. The increasing block tariff (IBT) is the most common tariff structure in Africa. Most African utilities are able to achieve O&M cost recovery at the highest block tariffs, but not at the first-block tariffs, which are designed to provide affordable water to low-volume consumers, who are often poor. Atthe same time, few utilities can recover even a small part of their capital costs, even in the highest tariff blocks. Unfortunately, the equity objectives of the IBT structure are not met in many countries. The subsidy to the lowest tariff-block does not benefit the poor exclusively, and the minimum consumption charge is often burdensome for the poorest customers. Many poor households cannot even afford a connection to the piped water network. This can be a significant barrier to expansion for utilities. Therefore, many countries have begun to subsidize household connections. For many households, standposts managed by utilities, donors, or private operators have emerged as an alternative to piped water. Those managed by utilities or that supply utility water are expected to use the formal utility tariffs, which are kept low to make water affordable for low-income households. The price for water that is resold through informal channels, however, is much more expensive than piped water.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 5384.
Date of creation: 01 Jul 2010
Date of revision:
Town Water Supply and Sanitation; Infrastructure Economics; Urban Water Supply and Sanitation; Water Supply and Systems; Energy Production and Transportation;
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Dominguez-Torres, Carolina & Foster, Vivien, 2011. "The Central African Republic's infrastructure : a continental perspective," Policy Research Working Paper Series 5697, The World Bank.
- Jimenez-Redal, Ruben & Parker, Alison & Jeffrey, Paul, 2014. "Factors influencing the uptake of household water connections in peri-urban Maputo, Mozambique," Utilities Policy, Elsevier, Elsevier, vol. 28(C), pages 22-27.
- Pushak, Nataliya & Briceno-Garmendia, Cecilia M., 2011. "Zimbabwe's infrastructure : a continental perspective," Policy Research Working Paper Series 5816, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.