Drivers of change in urban water and wastewater tariffs

Abstract

Water and wastewater tariffs constitute a primary avenue for utilities to generate revenue towards covering the costs associated with water and wastewater service provisions. In the pursuit of achieving global access to safe and affordable water and sanitation, utilities and governments play an important role in regulating and setting combined tariffs, so that they are able to fund the necessary infrastructure while at the same time ensuring that tariffs do not impede on the ability of consumers to access these services. From a survey of 568 cities across 192 countries, this paper examines the main economic and financial drivers of change to regional urban water and wastewater tariffs from 2018 to 2019. Historically, the average global price for water and wastewater services increased from US$ 1.70/m3 in 2011 to US$ 2.16/m3 in 2019, equating to an annual rise in the mean global combined water tariff of ∼3.4%. The analysis indicates that for the studied regions, the financial and economic costs associated with recurring droughts, old infrastructure, subsidy cuts, increasing energy costs and a shift to alternative water resources such as desalination all contribute to changes in tariffs. Further research on the social and political drivers of change in tariffs is needed, in order to provide a holistic understanding of the balance required to be struck between the objectives of affordability and cost-recovery for achieving global access to water and sanitation.