Pricing, Subsidies, and the Poor : Demand for Improved Water Services in Central America
Reformulating tariff and subsidy policies is central to improving water and sanitation services in developing countries. The traditional model of state enterprise service provision, coupled with residential tariffs set well below the cost of servic...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2000/11/717473/pricing-subsidies-poor-demand-improved-water-services-central-america http://hdl.handle.net/10986/19770 |
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okr-10986-19770 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ADEQUATE WATER CENTRAL GOVERNMENT CISTERNS CONTINGENT VALUATION COST OF WATER CROSS-SUBSIDIES CUBIC METER CUBIC METERS DEMAND CURVES DEMAND FOR WATER DOMESTIC WATER EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EQUILIBRIUM EXPENDITURES FIXED CHARGES FIXED FEE HEALTH STATUS HOUSEHOLD CONNECTION HOUSEHOLD INCOME HOUSEHOLD WATER HOUSEHOLD WATER DEMAND HOUSEHOLDS INCOME INCOME DISTRIBUTION INVESTMENT SUBSIDIES LOW-INCOME HOUSEHOLDS MAINTENANCE COSTS MARGINAL COST MICROECONOMICS NATIONAL WATER COMPANY OPPORTUNITY COST OF WATER PIPED WATER POLITICAL ECONOMY POTABLE WATER PRICE OF WATER PRIVATE OPERATORS PUBLIC HEALTH PUBLIC OWNERSHIP PUBLIC WATER QUALITY OF SERVICE RAW WATER RESIDENTIAL CONSUMERS RESOURCE ALLOCATION RIVER BASINS SAFE WATER SANITATION SERVICES SECTORAL POLICY SERVICE IMPROVEMENT SERVICE PROVISION SERVICE QUALITY SEWERAGE SERVICES SEWERAGE SYSTEM SMALL CITIES SMALL SURCHARGE STORAGE CAPACITY TARIFF ADJUSTMENTS TARIFF REFORM TARIFF SETTING TARIFF STRUCTURE URBAN AREAS WASTEWATER WASTEWATER COLLECTION WASTEWATER MANAGEMENT WASTEWATER TREATMENT WASTEWATER TREATMENT SYSTEMS WATER CHARGE WATER COMPANIES WATER COMPANY WATER CONSUMPTION WATER COVERAGE WATER DEMAND WATER DISTRIBUTION WATER METERS WATER PRICES WATER SERVICE WATER SERVICES WATER SUPPLY WATER SUPPLY COMPANIES WATER SYSTEM WATER TARIFF WATER TARIFFS WATER USERS WILLINGNESS TO PAY |
| spellingShingle |
ADEQUATE WATER CENTRAL GOVERNMENT CISTERNS CONTINGENT VALUATION COST OF WATER CROSS-SUBSIDIES CUBIC METER CUBIC METERS DEMAND CURVES DEMAND FOR WATER DOMESTIC WATER EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EQUILIBRIUM EXPENDITURES FIXED CHARGES FIXED FEE HEALTH STATUS HOUSEHOLD CONNECTION HOUSEHOLD INCOME HOUSEHOLD WATER HOUSEHOLD WATER DEMAND HOUSEHOLDS INCOME INCOME DISTRIBUTION INVESTMENT SUBSIDIES LOW-INCOME HOUSEHOLDS MAINTENANCE COSTS MARGINAL COST MICROECONOMICS NATIONAL WATER COMPANY OPPORTUNITY COST OF WATER PIPED WATER POLITICAL ECONOMY POTABLE WATER PRICE OF WATER PRIVATE OPERATORS PUBLIC HEALTH PUBLIC OWNERSHIP PUBLIC WATER QUALITY OF SERVICE RAW WATER RESIDENTIAL CONSUMERS RESOURCE ALLOCATION RIVER BASINS SAFE WATER SANITATION SERVICES SECTORAL POLICY SERVICE IMPROVEMENT SERVICE PROVISION SERVICE QUALITY SEWERAGE SERVICES SEWERAGE SYSTEM SMALL CITIES SMALL SURCHARGE STORAGE CAPACITY TARIFF ADJUSTMENTS TARIFF REFORM TARIFF SETTING TARIFF STRUCTURE URBAN AREAS WASTEWATER WASTEWATER COLLECTION WASTEWATER MANAGEMENT WASTEWATER TREATMENT WASTEWATER TREATMENT SYSTEMS WATER CHARGE WATER COMPANIES WATER COMPANY WATER CONSUMPTION WATER COVERAGE WATER DEMAND WATER DISTRIBUTION WATER METERS WATER PRICES WATER SERVICE WATER SERVICES WATER SUPPLY WATER SUPPLY COMPANIES WATER SYSTEM WATER TARIFF WATER TARIFFS WATER USERS WILLINGNESS TO PAY Walker, Ian Ordonez, Fidel Serrano, Pedro Halpern, Jonathan Pricing, Subsidies, and the Poor : Demand for Improved Water Services in Central America |
| geographic_facet |
Latin America & Caribbean Central America Venezuela, Republica Bolivariana de |
| relation |
Policy Research Working Paper;No. 2468 |
| description |
Reformulating tariff and subsidy
policies is central to improving water and sanitation
services in developing countries. The traditional model of
state enterprise service provision, coupled with residential
tariffs set well below the cost of service, has generally
delivered unsatisfactory results. Low internal generation of
funds has impeded expansion of networks into poor
communities and has resulted in very poor services there.
Most of the subsidy has benefited higher-income groups.
Reformers have proposed private provision to improve
efficiency, cost-reflective tariffs to permit the systems to
meet demand, and better-targeted subsidies. But is there
empirical evidence that existing subsidies are ineffective
and that the poor could pay the full cost of water services?
Analyzing household survey and water company data from
cities of Central America and Venezuela, the authors confirm
that: 1) Households without piped connections pay a lot for
small amounts of water from "coping sources." 2)
Most public water companies undercharge hugely, providing an
implicit, generalized subsidy and accelerating their
systems' decapitalization. 3) There is little
income-related differentiation in consumption and therefore
in effective piped water tariffs. Volume-based tariffs would
generate cross-subsidies from the rich to the poor if the
rich consumed more water. But the data indicate that
consumption of piped water varies little with income, so
most of the water subsidy is captured by the nonpoor. 4)
Poor households that are not presently connected would
clearly benefit from access to piped water supply. This
would require increasing tariffs to cost-reflective levels.
But where the urban poor already enjoy access, such tariff
increases would have a disproportionate impact on this
income group. This impact should be mitigated through
better-targeted, temporary subsidies. 5) The poor are often
willing to pay much more than the present tariff for access
to piped water but not necessarily the full cost of the
monthly consumption assumed by planners (30 cubic meters).
If tariffs were set to cover long-run financial costs, many
poor households would consume much less. Improving the
design of tariff structures and extending metering to such
households would permit them to regulate their expenditures
on water by controlling their consumption. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Walker, Ian Ordonez, Fidel Serrano, Pedro Halpern, Jonathan |
| author_facet |
Walker, Ian Ordonez, Fidel Serrano, Pedro Halpern, Jonathan |
| author_sort |
Walker, Ian |
| title |
Pricing, Subsidies, and the Poor : Demand for Improved Water Services in Central America |
| title_short |
Pricing, Subsidies, and the Poor : Demand for Improved Water Services in Central America |
| title_full |
Pricing, Subsidies, and the Poor : Demand for Improved Water Services in Central America |
| title_fullStr |
Pricing, Subsidies, and the Poor : Demand for Improved Water Services in Central America |
| title_full_unstemmed |
Pricing, Subsidies, and the Poor : Demand for Improved Water Services in Central America |
| title_sort |
pricing, subsidies, and the poor : demand for improved water services in central america |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2000/11/717473/pricing-subsidies-poor-demand-improved-water-services-central-america http://hdl.handle.net/10986/19770 |
| _version_ |
1764440599629398016 |
| spelling |
okr-10986-197702021-04-23T14:03:44Z Pricing, Subsidies, and the Poor : Demand for Improved Water Services in Central America Walker, Ian Ordonez, Fidel Serrano, Pedro Halpern, Jonathan ADEQUATE WATER CENTRAL GOVERNMENT CISTERNS CONTINGENT VALUATION COST OF WATER CROSS-SUBSIDIES CUBIC METER CUBIC METERS DEMAND CURVES DEMAND FOR WATER DOMESTIC WATER EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EQUILIBRIUM EXPENDITURES FIXED CHARGES FIXED FEE HEALTH STATUS HOUSEHOLD CONNECTION HOUSEHOLD INCOME HOUSEHOLD WATER HOUSEHOLD WATER DEMAND HOUSEHOLDS INCOME INCOME DISTRIBUTION INVESTMENT SUBSIDIES LOW-INCOME HOUSEHOLDS MAINTENANCE COSTS MARGINAL COST MICROECONOMICS NATIONAL WATER COMPANY OPPORTUNITY COST OF WATER PIPED WATER POLITICAL ECONOMY POTABLE WATER PRICE OF WATER PRIVATE OPERATORS PUBLIC HEALTH PUBLIC OWNERSHIP PUBLIC WATER QUALITY OF SERVICE RAW WATER RESIDENTIAL CONSUMERS RESOURCE ALLOCATION RIVER BASINS SAFE WATER SANITATION SERVICES SECTORAL POLICY SERVICE IMPROVEMENT SERVICE PROVISION SERVICE QUALITY SEWERAGE SERVICES SEWERAGE SYSTEM SMALL CITIES SMALL SURCHARGE STORAGE CAPACITY TARIFF ADJUSTMENTS TARIFF REFORM TARIFF SETTING TARIFF STRUCTURE URBAN AREAS WASTEWATER WASTEWATER COLLECTION WASTEWATER MANAGEMENT WASTEWATER TREATMENT WASTEWATER TREATMENT SYSTEMS WATER CHARGE WATER COMPANIES WATER COMPANY WATER CONSUMPTION WATER COVERAGE WATER DEMAND WATER DISTRIBUTION WATER METERS WATER PRICES WATER SERVICE WATER SERVICES WATER SUPPLY WATER SUPPLY COMPANIES WATER SYSTEM WATER TARIFF WATER TARIFFS WATER USERS WILLINGNESS TO PAY Reformulating tariff and subsidy policies is central to improving water and sanitation services in developing countries. The traditional model of state enterprise service provision, coupled with residential tariffs set well below the cost of service, has generally delivered unsatisfactory results. Low internal generation of funds has impeded expansion of networks into poor communities and has resulted in very poor services there. Most of the subsidy has benefited higher-income groups. Reformers have proposed private provision to improve efficiency, cost-reflective tariffs to permit the systems to meet demand, and better-targeted subsidies. But is there empirical evidence that existing subsidies are ineffective and that the poor could pay the full cost of water services? Analyzing household survey and water company data from cities of Central America and Venezuela, the authors confirm that: 1) Households without piped connections pay a lot for small amounts of water from "coping sources." 2) Most public water companies undercharge hugely, providing an implicit, generalized subsidy and accelerating their systems' decapitalization. 3) There is little income-related differentiation in consumption and therefore in effective piped water tariffs. Volume-based tariffs would generate cross-subsidies from the rich to the poor if the rich consumed more water. But the data indicate that consumption of piped water varies little with income, so most of the water subsidy is captured by the nonpoor. 4) Poor households that are not presently connected would clearly benefit from access to piped water supply. This would require increasing tariffs to cost-reflective levels. But where the urban poor already enjoy access, such tariff increases would have a disproportionate impact on this income group. This impact should be mitigated through better-targeted, temporary subsidies. 5) The poor are often willing to pay much more than the present tariff for access to piped water but not necessarily the full cost of the monthly consumption assumed by planners (30 cubic meters). If tariffs were set to cover long-run financial costs, many poor households would consume much less. Improving the design of tariff structures and extending metering to such households would permit them to regulate their expenditures on water by controlling their consumption. 2014-08-27T18:34:05Z 2014-08-27T18:34:05Z 2000-11 http://documents.worldbank.org/curated/en/2000/11/717473/pricing-subsidies-poor-demand-improved-water-services-central-america http://hdl.handle.net/10986/19770 English en_US Policy Research Working Paper;No. 2468 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research Latin America & Caribbean Central America Venezuela, Republica Bolivariana de |