Costs and affordability of water supply and sanitation provision in the urban areas of South Africa

This paper presents figures for cost, price, affordability and subsidy of water supply and sanitation provision in urban South Africa. With respect to the costs of water supply and sanitation, the cost of a high level of service (house connection and full water-borne sanitation) is approximately four times the cost of a low level of service (stand-pipe and VIP). These costs are often not fully reflected in the prices charged to domestic consumers. A comparison of the cost and price of domestic water supply and sanitation in Johannesburg shows that new domestic consumers pay only 75% of the average current replacement cost of their services while black authorities have been drastically undercharging for services. The shortfall between what is recovered and the actual cost will have to be covered by some form of subsidy. These subsidies are substantial when compared to the funds available to central government and therefore choices regarding the type and level of services should not be considered in isolation from other competing demands for funds. Although it is agreed that adequate access to water supply and sanitation is necessary for all, the paper concludes that subsidies should not be used for levels of service higher than adequate for health and for environmental protection.