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Publications & Research :: Policy Research Working Paper

Cost Recovery, Equity, and Efficiency in Water Tariffs : Evidence from African Utilities

ADMINISTRATIVE COSTS AFFORDABLE WATER AVERAGE TARIFF AVERAGE TARIFFS BALANCE BLOCK STRUCTURE BLOCK TARIFF BLOCK TARIFF STRUCTURE BLOCK TARIFFS CAPACITY BUILDING CAPITAL COSTS CENTRAL GOVERNMENT COMMERCIAL CUSTOMERS COMMERCIAL TARIFFS CONNECTION CHARGE CONNECTION CHARGES CONNECTION COST CONNECTION COSTS CONNECTION FEE CONNECTION FEE FOR SEWERAGE CONSUMPTION BLOCKS CONSUMPTION CHARGE COST OF WATER COST RECOVERY COVERING CROSS-SUBSIDIES CROSS-SUBSIDIZATION CUBIC METER CUBIC METERS CUBIC METERS PER MONTH DEMAND MANAGEMENT DESALINATION DISCOUNT RATE DISTRIBUTION OF WATER ECONOMIC BENEFITS ECONOMIC DEVELOPMENT ECONOMIC EFFICIENCY EFFECTIVE PRICE EFFICIENT PRICE ELECTRICITY EMPLOYMENT EQUITY CRITERION EXORBITANT TARIFFS FIXED CHARGE FIXED CHARGES FIXED COSTS FIXED FEE FLAT CHARGES FORMAL UTILITY FREE WATER GRAVITY GROSS DOMESTIC PRODUCT HIGH-VOLUME CONSUMERS HIGHER CONSUMPTION HOUSEHOLD CONNECTION HOUSEHOLD CONNECTIONS HOUSEHOLD CONSUMPTION HOUSEHOLDS INFRASTRUCTURE SERVICES INTERNATIONAL WATER INVESTMENT COST INVESTMENT COSTS IRRIGATION LEAKAGE LEVEL OF CONSUMPTION LEVELS OF CONSUMPTION LOW TARIFFS LOW-INCOME HOUSEHOLDS LOWER PRICES MAINTENANCE COSTS MARGINAL BENEFITS MARGINAL COST MARKET CONDITIONS METER READING METERING NATIONAL WATER NATIONAL WATER COMPANY NUMBER OF CUSTOMERS OPERATIONAL EXPENSES PAYMENT FOR WATER PERFORMANCE DATA PERFORMANCE INDICATORS PHYSICAL INFRASTRUCTURE PIPE PIPED WATER POOR CONSUMERS POOR HOUSEHOLDS PRICE INCREASES PRICE OF WATER PRICE SIGNALS PRIVATE OPERATORS PRIVATE SECTOR PARTICIPATION PROVISION OF WATER PUBLIC FOUNTAINS PUBLIC HEALTH PUBLIC STANDPIPES PUBLIC STANDPOSTS PUBLIC TAPS QUALITY WATER QUANTITIES OF WATER QUANTITY OF WATER RESIDENTIAL CONSUMERS RESIDENTIAL CUSTOMERS RETAIL PRICES SAFE WATER SANITATION SANITATION PROGRAM SANITATION UTILITIES SANITATION UTILITY SERVICE DELIVERY SERVICE PROVIDER SERVICE PROVIDERS SERVICE QUALITY SEWERAGE SEWERAGE AUTHORITY SEWERAGE COMPANY SEWERAGE CORPORATION SEWERAGE SERVICES SMALL TOWNS STATE UTILITIES SUBSIDIES FOR WATER SUPPLY WATER SUSTAINABLE WATER TARIFF BLOCK TARIFF CHANGES TARIFF DESIGN TARIFF INCREASE TARIFF LEVELS TARIFF POLICY TARIFF REGIMES TARIFF STRUCTURE TARIFF STRUCTURES TOLL URBAN WASTEWATER URBAN WATER URBAN WATER SUPPLY URBAN WATER SUPPLY SYSTEMS URBANIZATION USE OF WATER UTILITIES VALUE OF WATER VOLUME OF WATER VOLUMES OF WATER VOLUMETRIC CHARGE WASTEWATER CHARGES WASTEWATER SERVICES WASTEWATER SYSTEMS WASTEWATER TARIFF WATER BOARD WATER CHARGES WATER COMPANY WATER CONNECTION WATER CONSERVATION WATER CONSUMPTION WATER DEMAND WATER INTAKE WATER MARKET WATER METERING WATER POLICY WATER PRICE WATER SCARCITY WATER SERVICE WATER SERVICES WATER SHORTAGE WATER SUPPLIES WATER SUPPLY WATER SYSTEMS WATER TARIFF WATER TARIFFS WATER USAGE WATER USE WATER USERS WATER UTILITIES WATER UTILITY
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Africa | Africa | Africa
2012-03-19T18:41:14Z | 2012-03-19T18:41:14Z | 2010-07-01

Water 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. At the 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.

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