Editorial — Water Tariffs and Affordability: The Economics and Policy of Protecting the Poor

Abstract

We are writing the editorial note to this special issue on “Water Tariffs and Affordability: the Economics and Policy of Protecting the Poor” at a time (July2020) when access to water and sanitation services is more essential than ever. Handwashing is a critical measure to prevent the spread of COVID-19, but access to reliable water and sanitation services (and soap) is far from universal for households and health care facilities across the Global South. The genesis of the special issue on affordability predated the pandemic. A key strategy for adapting to changing water availability and rapid urbanization is a move towards full cost recovery tariffs for water and sanitation services. Volumetric prices that reflect the long-run marginal cost of supply help to incentivize customers to use scarce water resources wisely. Tariffs that recover the full costs of providing improved water and sanitation services also encourage managers to plan for future expansion by deploying capital resources wisely rather than relying on subsidies. Because these services are substantially underpriced in most places, this strategy implies that careful attention must be directed at programs to ensure that poor households can afford to pay their water bills. Achieving access to “safe and affordable” drinking water is target 6.1 of the United Nations’ Sustainable Development Goals to “ensure access to water and sanitation for all”. The SDGs include similar targets for goals in energy, transportation, housing, and education.