PAST RESEARCH

Demand Management

Comparing Urban Water and Wastewater Tariffs

Lead Researchers: Sonia Ferdous Hoque and Dennis Wichelns

Efforts to improve water delivery in urban areas often are constrained by limited financial resources, inadequate institutional capacity, or a limited water supply. Many national and local governments strive to close the gap between water supply and demand, using some combination of supply enhancement and demand management strategies. Supply side efforts include reducing leaks and non-revenue losses, and developing new sources through water capture, recycling, or desalination. Demand management involves promoting water saving devices, increasing public awareness, raising water prices, and imposing restrictions on water use.

Water and wastewater tariffs are critical features of water delivery programs. Appropriately designed tariffs can be helpful in achieving the goals of revenue sufficiency, equity, and affordability, provided that other desirable aspects of water governance and resource policies are in place. Prices also are helpful in communicating resource scarcity and promoting household practices that are consistent with the goal of managing urban water resources in sustainable fashion.

Objective

Researchers in the Institute of Water Policy have examined the water and wastewater tariffs pertaining to the domestic and non-domestic sectors in 60 cities in both developed and developing countries. For each of the cities, we have calculated the water and wastewater bills for a household consuming 20 m3 of water per month, and for a non-domestic facility consuming 100 m3 per month. In addition to calculating the combined water and wastewater bills, we have disaggregated the bills into the pertinent tariff components, to describe the proportions of fixed, variable and miscellaneous charges paid by consumers.

Direct monetary comparison of bills is not completely helpful without analyzing the socio-economic conditions in each city. Hence, in our study, we express the monthly household water and sewerage bills as a portion of household income. We also estimate the per capita annual water and wastewater bill for daily consumption of 155 litres, and we compare this with the gross regional product (GRP) in each city (or province/state, in cases where city level GRP is unavailable) to understand the relationship between expenditures on water and wastewater services and economic development. The general findings of our study are described in IWP Research Brief Issue 4 (July 2013).