Re-examining the ‘low water tariff’ hypothesis: lessons from Hyderabad, India

Abstract

Researchers suggest urban water utilities in India operate on low tariffs, consequently earning revenue insufficient to recover operation and management (O&M) costs of water storage, treatment and distribution. From findings of a field study conducted in Hyderabad, India, the paper suggests otherwise. While ‘stated’ tariffs are low, households currently pay tariffs far higher than in other regions of the world because of institutional indifference toward improving service attributes, particularly quantity and poor measurement of domestic water consumption; following which, poor communities pay more for less. While poor cost recovery precludes improved performance of urban water utilities, targeting this facet alone at the cost of other aspects of service does not, as the paper demonstrates, necessarily lead toward qualitative service improvement or toward improved households' perception of water services.