Addressing the social consequences of tariffs for water supply and sanitation

Abstract

Addressing the social consequences of tariffs for water supply and sanitation-Environment Working Paper No. 166 By Xavier Leflaive (1), Marit Hjort (2) (1) OECD Environment Directorate (2) OECD Environment Directorate (at the time of drafting; then UNDP) OECD Working Papers should not be reported as representing the official views of the OECD or its member countries. The opinions expressed and arguments employed are those of the authors.

Estimating Residential Water Demand Under Systematic Shifts Between Uniform Price (UP) and Increasing Block Tariffs (IBT)

“…Estimating price elasticities under different tariff structures, including nonlinear ones, has important policy implications, mainly in the design of water-pricing schemes. Academics, authorities, and water utility managers try to predict the impact of different tariff structures on water consumption and multiple opposite tariff goals (Fuente, 2019;Klassert et al, 2018;Leflaive & Hjort, 2020;Nauges & Whittington, 2017;Renzetti et al, 2015; Water Resources Research 10.1029/2022WR033508 Rinaudo et al, 2012;Smith & Al-Maskati, 2007;Thrikawala et al, 2008). Authors use the estimated parameters of water demand functions and the price elasticity of demand as inputs in their evaluations; therefore, they need reliable estimates that consider the nonlinearities of the rates.…”

“…Authors use the estimated parameters of water demand functions and the price elasticity of demand as inputs in their evaluations; therefore, they need reliable estimates that consider the nonlinearities of the rates. Furthermore, using nonlinear structures, particularly IBT, has become common worldwide (Leflaive & Hjort, 2020;Whittington & Nauges, 2020).…”

Assessing the enabling conditions for investment in Armenia's water security

“…In addition, the construction of centralized wastewater systems in these settlements may not be possible and individual solutions may be required in such settlements. component will deal with the rural water supply and sanitation enhancement for the self-supplied communities (KfW, 2023 [9]).…”

Financing water security for sustainable growth in Asia and the Pacific

“…In some countries (such as Mongolia, Viet Nam, the Philippines, Indonesia and Bangladesh) affordability concerns may act as a constraint on tariff increases. However, instead of acting as a barrier to tariff increases, affordability concerns can be (and are best) addressed outside of the water bill, through welldesigned and targeted social measures (Leflaive, Hjort, 2020). These may take the form of cross-subsidies across water users or territories (from urban to rural areas).…”

“…Experience with sophisticated tariff structures, such as increasing block tariffs, has been less successful. They require a lot of information, which may not be available, and can end up being regressive, often benefitting higher income households that can afford water-efficient appliances and to pay more for water services, while disadvantaging the poor or vulnerable groups that may reside in crowded households (Leflaive, Hjort, 2020).…”