Pricing, Subsidies, and the Poor : Demand for Improved Water Services in Central America

Walker, Ian ; Ordonez, Fidel ; Serrano, Pedro ; Halpern, Jonathan

World Bank, Washington, DC

关键词: ADEQUATE WATER;    CENTRAL GOVERNMENT;    CISTERNS;    CONTINGENT VALUATION;    COST OF WATER;   

DOI  :  10.1596/1813-9450-2468
RP-ID  :  WPS2468

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Reformulating tariff and subsidypolicies is central to improving water and sanitationservices in developing countries. The traditional model ofstate enterprise service provision, coupled with residentialtariffs set well below the cost of service, has generallydelivered unsatisfactory results. Low internal generation offunds has impeded expansion of networks into poorcommunities and has resulted in very poor services there.Most of the subsidy has benefited higher-income groups.Reformers have proposed private provision to improveefficiency, cost-reflective tariffs to permit the systems tomeet demand, and better-targeted subsidies. But is thereempirical evidence that existing subsidies are ineffectiveand that the poor could pay the full cost of water services?Analyzing household survey and water company data fromcities of Central America and Venezuela, the authors confirmthat: 1) Households without piped connections pay a lot forsmall amounts of water from "coping sources." 2)Most public water companies undercharge hugely, providing animplicit, generalized subsidy and accelerating theirsystems' decapitalization. 3) There is littleincome-related differentiation in consumption and thereforein effective piped water tariffs. Volume-based tariffs wouldgenerate cross-subsidies from the rich to the poor if therich consumed more water. But the data indicate thatconsumption of piped water varies little with income, somost of the water subsidy is captured by the nonpoor. 4)Poor households that are not presently connected wouldclearly benefit from access to piped water supply. Thiswould require increasing tariffs to cost-reflective levels.But where the urban poor already enjoy access, such tariffincreases would have a disproportionate impact on thisincome group. This impact should be mitigated throughbetter-targeted, temporary subsidies. 5) The poor are oftenwilling to pay much more than the present tariff for accessto piped water but not necessarily the full cost of themonthly consumption assumed by planners (30 cubic meters).If tariffs were set to cover long-run financial costs, manypoor households would consume much less. Improving thedesign of tariff structures and extending metering to suchhouseholds would permit them to regulate their expenditureson water by controlling their consumption.