Access for the poor and excluded : tariffs and subsidies for urban water supply

Access to safe water is a human need and basic right. And yet, roughly half of urban dwellers in sub-Saharan Africa and South and South-East Asia lack access to clean, safe, affordable water. The reasons are often financial, with poor people unable to afford connection fees. Meanwhile, utilities often lack the funds to invest in extending water networks into un-served areas, and incentives to do so. Legal barriers such as lack of land tenure, and physical barriers such as the difficulty of laying pipes in crowded urban slums, also stand in the way. As a result, the urban poor often pay many times more for their water from alternative providers because they are excluded from the official water network. Tariff and subsidy design has a key role to play in ensuring that everyone, however poor or socially excluded, is able to gain and maintain access to safe and affordable water. This paper aims to demystify tariffs and subsidies and demonstrate how they can play this role. It does not provide a universal template for the design of tariffs or subsidies for water supply, but presents a beginner’s guide to the major types and
the challenges and opportunities each presents. [authors abstract].

This publication is the first of a set of three WaterAid discussion papers on how to improve water and sanitation services to poor people. The set includes:
• Access for the poor and excluded: tariffs and subsidies for urban water supply
• Water utilities that work for poor people : increasing viability through pro-poor service delivery
• Social accountability: tools and mechanisms for improved urban water services