Water tariffs and social equity: Towards water service connections and pricing instruments for the poor

Abstract

Aside from operational sustainability and efficiency goals, water tariffs also need to address the requirements of affordability and equity, in most instances, by providing subsidies to poor households. Yet, poor households are unable to enjoy the benefits of such cross‐subsidization and linked conveniences as they are unable to get water service connections. Even with a well‐designed water tariff, the inability of poor households to get piped connections results in the payment of premiums for water that is difficult to access and, at times, of questionable quality. In this paper, we assess the pro‐poor projects of three Philippine municipal water systems and suggest that providing water service connections to poor households allows these households to avoid paying the water poverty premium, as well as experience the related public health and quality of life benefits accruing from such connections. We argue that designing the best tariff for existing socio‐economic, political, and environmental realities must go hand in hand with programs that provide water service connections to poor households as this will ensure not only operational viability but also equitable water provision.