Tariffs may cover operating costs but are rarely enough to cover all other costs (OECD, 2009) For example one third of the 66 countries in the [[#GLAAS |GLAAS]] country survey (2012, p. 36) indicate that collected revenue with tariffs covers less than 80% of operating costs for urban utilities.
In many countries, water tariffs have not been adjusted for years and do not cover production and distribution costs (Ginneken et.al, 2011). Tariff adjustment for water is a very sensitive political issue, and governments have proven reluctant to approve increases. For instance, tariffs have remained unchanged in the Republic of Congo since 1994, in the Central African Republic since 1998, and in Togo since 2001.
====India: Pay-per-use and subscription for sanitation====
In Trichy in the state of Tamil Nadu, India, women self-help groups run most municipal sanitation blocks with the help from WaterAid India and their own federation (Water Aid, 2008). They use both payments per visit and monthly subscriptions for adult users, with locally set fees. Typical single user fees are INR 0.50 (US$ 0.01) for defecation and INR 2 to INR 3(US$ 0.04 to US$ 0.06) for bathing and doing laundry. Subscribers pay INR 16 to 32 (US$ 0.32 to US$ 0.64) per month. Use is free for children, the elderly and single women
(WaterAid, 2008). Sijbesma (2011, page 49); ‘The reported monthly expenditure indicates that households who pay per visit do not use the sanitation block every day. The reasons are not clear, but it is likely that under capacity and queuing for toilets at peak times motivate users to go back to open defecation.’
====Kenya: Increasing Block Tariff to empty toilet pits====
In Kibera, Nairobi, Kenya, ‘frogmen’ (so called because of their resemblance to frogs in the ‘mud’) manually empty pit toilets charge the equivalent of US$ 2.60 per foot (or about 30 cm) of excreta (Eales, 2005).
====Water tariffs in Africa====
Studies in African countries indicate that the average African water tariff of about $0.67 per cubic meter is well below the full cost of production and distribution of $1.00 per cubic meter (Foster and Briceño-Garmendia 2009).
====Mozambique: Reaching the pro-poor through innovative connection charges====In 2010, the Mozambique water-sector asset owner and investment agency (FIPAG) reduced the connection fee by 50% and now allows fee payment over a period of 12 months. This has led to a sharp increase in the connection rate among low-income householders, most of whom previously paid much higher per-litre prices for lower-quality water from informal suppliers (on average about 40% more) (Norman et.al., 2012). The 5-year target is to expand from 100,000 to 300,000 utility-connected customers in the capital city of Maputo alone. Norman et.al. (2012, page 18); ‘The cost to FIPAG of about $75 per connection, is being met a) by streamlining connection processes and thus reducing per-connection cost, b) by levying a new surcharge on water supply to the country’s ports, and c) by setting up a revolving fund to finance the remaining balance.’ ====South Africa: Free Basic Water==== The South African government decided in 2001 to provide a basic amount of access to 25 litres of safe water per person per day, within 200 metres of the household free of charge to all citizens. A review of the implementation of the South African Free Water policy (Muller, 2008, page 67) suggests that the policy has helped not only to achieve social equity but also has supported the broader objectives of conservation and environmental sustainability. Muller (2008, page 67); ‘The political legitimacy conferred by the approach has enabled water supply organizations to recover their costs and achieve the economic objective of financial sustainability. South Africa’s experience with free basic water thus demonstrates that addressing social and environmental dimensions together with economic dimensions can lead to more effective and sustainable policy.’ ====Ghana: Lifeline Water Tariff====The Ghana Water Company Limited sets tariffs with the approval of the Public Utilities Regulatory Commission (Cardone and Fonseca, 2004). As of the end of 2002, metered domestic customers who consume up to 10,000 litres per month pay a “lifeline” rate of 990 Cedis per 1,000 litres (rate 2004 US$1 = 8,450 Cedis), an increase of 98%. Other domestic customers who consume more than 10,000 litres per month pay rate increases of 98% to 177%. Boreholes, wells and hand-pump users pay a flat rate of 3,000 Cedis per house per month. Consumers who obtain water from standpipes pay 1,000 Cedis per 1,000 litres, an increase of 150%. ====Botswana: Increasing Block Water Tariff====In Botswana, the Ministry of Mineral Resources and Water Affairs has been responsible for the national water policy since 1993 (Cardone and Fonseca, 2004). A pricing system was implemented based on principles of equity, efficiency and cost recovery. Water from standpipes was supplied free, and households with private connections were provided with a lifeline-type tariff for the first 5 m3 consumed. Ranges for consumption were grouped according to bands. Table 2 below shows the ranges of consumption and tariffs charged. '''Table 2. Botswana IBT Tariff in Botswana Pulas (US$1 = 2.82 P, rate 1996)'''{|border="1" cellspacing="0" cellpadding="5"|-! scope="col"|Band! scope="col"|Use per month, m3! scope="col"|Tariff P per m3|-|1 |0-5 |0.45|-|2 |6-20 |0.90|-|3 |21-40 |1.80|-|4 |>40|3.50|}Source: World Bank, 1997 ====Uganda: Single-Tariff Pricing for water services====In Uganda in 1995, water tariffs were set by the National Water and Sewerage Corporation, which had a monopoly over service provision at that time (Cardone and Fonseca, 2004). Water charges included all operations and minor maintenance costs, depreciation and capital costs and also social equity (World Bank, 1997). As of April 1995, un-metered residential consumers paid flat rates that were based on the number of taps. Table 3 below demonstrates the difference between metered and unmetered connections. '''Table 3. Uganda Flat Tariffs for Un-Metered Use in Ugandan Shillings (US$1 = 1-5- shillings, rate 1996)'''{|border="1" cellspacing="0" cellpadding="5"|-! scope="col" |Number of Taps! scope="col" |Amount of Shillings|-|1 Tap|3,696|-|2-4 Taps|11,088|-|5-8 Taps|18,480|-|Over 8 Taps|27,720|-|Metered (per m3)|616|}Source: World Bank, 1997 ====Malaysia: Two Part Block Water Tariff==== In Malaysia, Ranhill Utilities Berhad, a water supply group, received approval from the State Government of Johor in May 2003 to increase water tariffs for different users (Cardone and Fonseca, 2004). Multiple tariff structures are being used, such as an increasing block tariff for domestic users and industry; a uniform tariff for shipping and plantations, and a two-part tariff for government institutions. Details for the two-part tariff are presented in table 4 below, with minimum charge, and a flat rate for additional consumption. Based on the Kuala Lumpur Stock Exchange announcement, the tariff took effect on 1 July 2003. '''Table 3. Malaysia – Two-Part Tariff in Malaysian Ringgets (US$1 = 3.8 R, rate 2003)'''{|border="1" cellpadding="0" cellpadding="5"|-! scope="col" |Amount! scope="col" |Revised Rate (2003-2005)|-|Flat rate|2.13/m3|-|Minimum Payment|9.24|}Source: Kuala Lumpur Stock Exchange announcement ==Key documents==* Dinar, A. and Subramanian, A. , 1997. Water pricing experiences : an international perspective. (World Bank technical paper; no. 386). Washington, DC, USA: World Bank* Eales, K., 2005. Bringing pit emptying out of the darkness: A comparison of approaches in Durban, South Africa, and Kibera, Kenya. (Sanitation Partnership Series) [online] London: BPD-Building Partnerships for Development (Published April 2005).* Fonseca, C. and Cardone, R., 2003. Financing and cost recovery. (Thematic overview paper / IRC ; 7). The Hague, The Netherlands: IRC International Water and Sanitation Centre* Harvey, P.A., 2007. Cost determination and sustainable financing for rural water services in sub-Saharan Africa. In: Water policy, 9 (4), pp. 373-391* Hervé-Bazin, C., 2012. ‘3Ts’ : tariffs, taxes and transfers in the European water sector : short guide. Brussels, Belgium: EUREAU * Muller M., (2008). Free basic water — a sustainable instrument for a sustainable future in South Africa. Graduate School of Public and Development Management, University of Witwatersrand, South Africa, Environment and Urbanization 2008 20: 67.* Norman, G., Fonseca, C. and Jacimovic, R., 2012. Financing water and sanitation for the poor : six key solutions. (Water and Sanitation for the Urban Poor : Discussion Paper; DP#003). The Hague, The Netherlands: IRC International Water and Sanitation Centre and London, UK: Water and Sanitation for the Urban Poor (WSUP) * OECD , 2009. Managing water for all : an OECD perspective on pricing and financing. Paris, France: OECD. * Pezon, C., Fonseca, C. and Butterworth, J., 2010. IRC Symposium 2010 Pumps, Pipes and Promises: background paper: pumps, pipes and promises : costs, finances and accountability for sustainable WASH services. The Hague, The Netherlands: IRC International Water and Sanitation Centre. * Sijbesma, C., 2011. Sanitation financing models for the urban poor. (Thematic overview paper / IRC; 25). The Hague, The Netherlands: IRC International Water and Sanitation Centre. * WHO and UN-Water, 2012. UN-Water global annual assessment of sanitation and drinking-water (GLAAS) 2012 report : the challenge of extending and sustaining services. Geneva, Switzerland: World Health Organization (WHO)* WaterAid, 2008. Community-Municipal Corporation-NGO partnership for city-wide pro-poor slums’ infrastructure improvement: Policy recommendations for community-managed toilets, bathing and washing complexes in urban slums. New Delhi: WaterAid.* Winpenny, J., 2011. Financing for water and sanitation : a primer for practitioners and students in developing countries. Stockholm, Sweden: The European Union Water Initiative Finance Working Group, EUWI-FWG. ==Links==• * IRC International Water and Sanitation Centre is a knowledge broker, innovator and catalyst of change within the water, sanitation and hygiene (WASH) sector working internationally and in selected focus countries and regions. IRC seeks to extend WASH services to the less privileged, while ensuring that services are based on the sustainable use of water resources, are appropriately managed, and are better governed. IRC works in partnership with governments, the public and private sector, Dutch and international organisations, UN institutions, development banks and non-governmental networks and organisations. For more information see www.irc.nl
<div id="GLAAS">'''GLAAS'''</div>
• * Global Analysis and Assessment of Sanitation and Drinking-Water (GLAAS) is produced every two years by the World Health Organization (WHO) on behalf of UN-Water. It provides a global update on the policy frameworks, institutional arrangements, human resource base, and international and national finance streams in support of sanitation and drinking-water. For more information see [http://www.who.int/water_sanitation_health/publications/glaas_report_2012/en/index.htmlwho.int/water_sanitation_health/publications/glaas_report_2012/en/index.html]
