Africa: Cruel Irony: Water Costs the Most for Those Who Can Least Afford It

Posted November 9, 2006 in [Water]

United Nations Development Programme (New York)

Longstanding public-versus-private debate hinders real progress, says 2006 Human Development Report

Across the world, the poor are forced to pay much more for clean water than their affluent neighbours, says the 2006 Human Development Report, released today.

   
The Report, entitled Beyond scarcity: Power, politics and the global water crisis, notes that in the slums of Nairobi the poor pay five to 10 times more per litre of water than wealthy people living in the same city. The poorest households of El Salvador, Nicaragua and Jamaica spend on average over 10 percent of their income on water; in the United Kingdom, by contrast, spending more than three percent of family income on water is considered an economic hardship.

And the longstanding public-versus-private debate on water will not bring prices down, stresses the 2006 HDR. In recent years, public debate on water-delivery policy in developing countries has been dominated by a polarizing discussion on privatization versus public ownership. But the authors argue that this is a false choice, diverting attention from the ultimate goal of finding viable ways of getting potable water to those who can least afford to pay.

"The debate over the relative merits of public and private-sector performance has been a distraction from the inadequate performance of both public and private water providers in overcoming the global water deficit," says the Report. A new, more strategic approach that puts the poor at the centre of the solution is essential to reach the Millennium Development Goals by 2015, stress the authors.

As a starting point, the Report advocates for all governments to go beyond vague constitutional principles in enabling legislation to ensure the human right to a secure, accessible and affordable supply of water. At a minimum, this implies a target of at least 20 litres of clean water a day for every citizen—and at no cost for those too poor to pay, the authors emphasize.

The way forward

The 2006 HDR lays out a number of recommendations on how to make this a reality:

•    Put water at the centre of poverty-reduction strategies and budget planning:

A bold, coherent national water plan grounded in strategies for reducing poverty

and extreme inequality is a first step, stress the authors, but this needs to be backed with predictable finance.

•    Extend 'lifeline tariffs': The 2006 HDR notes that lifeline tariffs would allow poor households to access a minimum amount of water for a very low price or no charge, with usage fees rising thereafter. South Africa has already legislated that every person should have a minimum of 25 litres of clean water each day. However, tariffs alone will not help where informal settlements are not connected to the utility or where households do not have meters installed, says the Report.

•    Expand 'pro-poor' investment: Water is underfinanced, says the Report. The biggest financing gaps are in rural areas and in informal urban settlements. Closing these gaps requires increased financing and a reorientation of public spending to rural communities, through the provision of wells and boreholes, and to urban slum areas, through the provision of standpipes.

•    Set clear goals—and hold providers to account: The authors stress that contract arrangements under public-private management agreements should set clear goals for expanding access for poor households living in slums.

Non-performance should result in financial penalties. The same rules should apply to public providers, with nonperformance penalized through incentive systems, says the Report.

•    Develop and expand the regulatory framework: The public-versus-private debate has diverted attention from the pressing issue of public utility reform, stress the authors. "The water sector has many of the characteristics of a natural monopoly and in the absence of a strong regulatory capacity to protect the public interest through the rules on pricing and investment, there are dangers of monopolistic abuse," says the Report. It stresses that creating an independent regulator to oversee water providers—including the intermediaries that serve the poor—is vital for ensuring that water provision reflects the public interest.

•   Rethink and redesign water tariffs and subsidies: Subsidies can play a critical role in delivering affordable water to the poor, says the Report, but too often, they instead deliver windfalls to the non-poor, while impoverished households using public taps face the highest prices. Targeted subsidies depend on the capacity of the government to identify poor households. Where done properly, as in Chile, this can be a route to efficient water delivery by private utilities and high levels of equity in water access. Using cross-subsidies—a combination of pricing and access policies, including targeted subsidies—to support standpipe users where coverage rates are low would be a step towards improved equality.