Pricing Water and Sanitation Services

2006 Occasional Paper
By Whittington, Dale

A tariff is an important management tool that can be used to assist with efforts to improve the delivery of water and sanitation (W&S) services. The pricing of W&S services is, however, controversial, and it is important to understand why there is so little consensus on water and sanitation tariff issues. There are four main reasons. First, there is disagreement over the objectives of water pricing and tariff design. Water pricing decisions affect several different objectives or goals of policymakers, often in conflicting ways. This means that if one person is looking solely (or mostly) at the consequences of a particular water pricing policy in terms of one objective, and another person is looking at the same water pricing policy in terms of its impact on another objective, they may reach quite different conclusions about the attractiveness of the pricing policy.