Solution Provider: Vito
Targeted Markets: Beyond Europe
Description of the Solution
Tools to design efficient and fair cost recovery for water supply and sanitation. To recover the costs for urban water supply and sanitation with an effective, efficient and fair tariff structure for water services, a delicate balance is needed between different principles including polluter pays, beneficiary pays, administrative simplicity, policy coherence, fairness and affordability. To support the water regulator and sector in Flanders, Belgium, Vito developed tools for the design and assessment of alternative cost recovery strategies. The tools identify the drivers of costs and revenues to assess the share of different user groups. Alternative tariff structures are compared accounting for economic aspects (degree of cost recovery, incentives for cost savings, administrative complexity), ecological aspects (incentives for water savings and pollution prevention) and social aspects (impact on water bill and income for different groups, exemptions for vulnerable groups). The strategy can be assessed against the requirements for cost recovery of the European Water Framework directive. The tools are generic and can be applied to different regions, using local data.
Main Innovative Element:
Quantitative assessment using generic tools fed with local data to assess impacts of alternative tariff structures for urban water services, calculating share of different user groups in costs and revenues; and indicators for economic, ecologic and social impacts of alternative tariff structures that ensure full cost recovery
Kinds of Problems
Design of optimal tariff structure for cost recovery for water supply and sanitation, striking the right balance between economic aspects (cost recovery, administration costs); ecological aspects (incentives for water efficiency and pollution prevention) and social impacts (fairness, affordability). Tools to help water managers, water regulators and stakeholders understand trade-offs involved and quick scan new alternative scenarios.