International Decade for Action "Water for Life" 2005-2015rss RSS SubscribeEnglish Español

Cost Recoverable Tariffs to Increase Access to Basic Services among Poor Households

Cost Recoverable Tariffs to Increase Access to Basic Services among Poor Households
  • Asian Development Bank (ADB). March 2013
  • This paper presents a methodological approach to identifying tariff structures that ensure cost recovery for the provider while increasing take-up of basic services among the poor. It entails modelling the demand function for the entire market of potential users of the service using survival curve estimation techniques and knowing the costs faced by the provider. This allows for the identification of differential pricing schemes where less disadvantaged groups are charged higher prices in order to effectively cross-subsidize the lower prices charged to the poor. The low additional cost to implementing tariff structures with differential pricing therefore makes it a potentially powerful tool for increasing take-up of important services among the poor enabling providers of basic services to aid in more sustainable development while still allowing the provision of the service to be viable over the long term. However, the paper shows that altering tariff structures may not work for all types of services where the differences in willingness to pay (WTP) are less determined by level of income. To provide a concrete example, the approach is applied to a contingent valuation survey that captured household and businesses WTP for access to improved water and new sanitation services provided by the Metropolitan Cebu Water District (MCWD) in the Philippines.
  • Geographical coverage: Asia, Global, Philippines, Metro Cebu
  • Main themes: Cost recovery, Poverty, Sanitation, Tariffs, Water services
  • Main target audience: Policy makers, Water operators
  • Main purpose: Technical
  • Type of resource: Methodology, Survey results
  • Download file (622 KB)
Looking for a specific country?
Looking for your language?
Bimonthly publications review

Subscribe to the Bimonthly Publications Review. Produced by the UN-Water Decade Programme on Advocacy and Communication (UNW-DPAC), this review brings you every two months the latest publications produced by United Nations agencies and programmes on issues related to water and sanitation.

Published in 2015