Pricing Water and Sanitation Services


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Publication Title

Pricing Water and Sanitation Services

Publication Type

Occasional Paper of the 2006 Human Development Report


Dale Whittington

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The purpose of this paper is to provide the reader with a better understanding of the main issues involved in the design of W&S tariffs. Section 2 summarizes the costs of providing piped W&S services. Obviously these costs vary widely depending on local circumstances, but the presentation of some estimates different components of the costs of providing such services illustrates that they are not cheap. Section 3 discusses alternative development paths for moving from low levels of W&S service (or no service at all) to modern piped services, and shows the costs associated with various incremental changes. Section 4 presents the four main objectives of tariff design. Section 5 summarizes the main tariff options. Section 6 describes the basic ideas of dynamic marginal cost pricing in the W&S sector and illustrates how a two-part tariff can be used to achieve both economic efficiency and cost recovery objectives. Section 7 discusses how subsidies can be best used in the W&S sector to reach poor households. Section 8 offers some concluding remarks.



See also

HDR 2006 - Beyond Scarcity: Power, Poverty and the Global Water Crisis

HDR 2006 Bibliography

External Resources



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