© SIWI | siwi.org Water pricing, poverty and equity Scanning for linkages in southern Africa Dialogues on Water Governance Fortaleza, 23-26 November 2015

© SIWI | siwi.org

Water pricing, poverty and equityScanning for linkages in southern Africa

Dialogues on Water Governance Fortaleza, 23-26 November 2015

© SIWI | siwi.org

The Stockholm International Water Institute (SIWI) is a policy institute that contributes to international efforts to combat the world’s escalating water crisis.

•Non-profit, politically neutral•Founded in 1991•80 staff members + 10 associated experts•Supported by the Swedish government, City of Stockholm and founders of the Stockholm Water Prize.•Programmes and activities also funded by multi- and bilateral donors and international organisations/agencies.

Stockholm International Water Institute

© SIWI | siwi.org

SIWI – a water policy institute with two offices

SIWI head office in Stockholm

SIWI Africa Regional Centre

in Pretoria

© SIWI | siwi.org

• Support on strategy for raw water pricing

• Affordability of great concern

• Scanning study of six African countries, together with Water Research Commission in South Africa

SIWI and Botswana Department for Water Affairs

© SIWI | siwi.org

Southern Africa

© SIWI | siwi.org

Possible synergies •Access to water and sanitation > cost effective poverty reduction (if financially sustainable, so that service is continuous)

•Investment in irrigation improves food security and rural livelihood opportunities

•Water pollution charges prevent negative impacts on downstream users of raw water (often the poorest)

Possible trade-offs•Tariffs based on long run marginal cost of water supply may equal a large share of the household budget

•Productivity or job loss for small enterprises and small farmers

•Agricultural intensification may lead to water pollution or conversion of wetlands

Why policy coherence? Linkages between poverty reduction and water pricing

© SIWI | siwi.org

How do water pricing mechanisms consider equity issues?

To what extent is water considered in poverty reduction strategies?

Are water pricing and poverty reduction strategies aligned?

Primary study questions

© SIWI | siwi.org

2 -1 -

3 -

4 -

5 -

6 -

7 -

100 -

0 -

Shill

ings

per

litr

e

~ U

SD /

cubi

c m

etre

Geographic/income variation

The poorest The richest

Collection from free sources / nature

GeneralizedPriceLevel

The poor pay more?

Dar es Salaam, Tanzania. Data from Kjellén, 2006.

2 -1 -

3 -

4 -

5 -

6 -

7 -

100 -

0 -

Shill

ings

per

litr

e

~ U

SD /

cubi

c m

etre



Collection from free sources / natureOwn connection



2 -1 -

3 -

4 -

5 -

6 -

7 -

100 -

0 -

Shill

ings

per

litr

e

~ U

SD /

cubi

c m

etre




Collection from re-sellers/kiosks

Own connection



2 -1 -

3 -

4 -

5 -

6 -

7 -

100 -

0 -

Shill

ings

per

litr

e

~ U

SD /

cubi

c m

etre





Own connection

Tankers



2 -1 -

3 -

4 -

5 -

6 -

7 -

100 -

0 -

Shill

ings

per

litr

e

~ U

SD /

cubi

c m

etre





Own connection

Pushcart vendors

Tankers



2 -1 -

3 -

4 -

5 -

6 -

7 -

100 -

0 -

Shill

ings

per

litr

e

~ U

SD /

cubi

c m

etre





Own connection

Pushcart vendors

Bottled water

Tankers



2 -1 -

3 -

4 -

5 -

6 -

7 -

100 -

0 -

Shill

ings

per

litr

e

~ U

SD /

cubi

c m

etre

Tim

e an

d la

bour

inpu

t





Own connection

Pushcart vendors

Bottled water

Tankers


Level of Effort


© SIWI | siwi.org

Southern Africa

© SIWI | siwi.org

Renewable fresh water resources per capita in m3

© SIWI | siwi.org

Fresh water withdrawal as % of internal resources

© SIWI | siwi.org

Absolute poverty (% of people living below national poverty line)

© SIWI | siwi.org

• Pricing principles are provided for in water legislation but not in detail

• Only South Africa, Zambia and Tanzania have water pricing strategies

• Prices are set by water service providers with the approval of the Minister of Water

• The main principle for pricing is cost recovery but this differs by areas: – Full supply cost in urban centres; – Operations and maintenance costs mainly in rural areas

Water pricing policies across countries

© SIWI | siwi.org

Costs that can be recovered through charges

© SIWI | siwi.org

• Only Botswana and Tanzania have explicit poverty reduction strategies

• In the other countries, poverty reduction is integrated in rural development strategies and national planning frameworks

• Focus on increasing – economic opportunities for employment creation and

income generating activities, – citizen empowerment, – investing in public infrastructure, – increasing access to social amenities such as education

and health,– implementation of social safety nets

Poverty reduction across the countries

© SIWI | siwi.org

• Rising block tariffs, subsidies or free water for basic needs (varying target groups and levels of subsidy)

• Subsidies for agricultural water use

• Exemptions from charges for poor farmers (South Africa)

• Support funds to poor areas supplied by private operators (urban and rural) (Zambia)

• Price controls for water kiosks (Zambia and Malawi)• Connection fees paid in instalments (not lump sum)

(Zambia)

Poverty/equity considerations in water pricing

© SIWI | siwi.org

• Extending access to water supply and sanitation• Development of irrigation infrastructure

• Conservation agriculture (Malawi)• Protection of basin water resources from

pollution and depletion (Tanzania)• Work for Water (eradicate invasive species) (SA)

But: land and water reforms often disconnected

Water aspects of poverty strategies

© SIWI | siwi.org

• The Poverty Eradication Programme ”package” for backyard gardening has provided gardening tools to 3078 poor households

• Water access or ability-to-pay not considered – some water bills cancelled by government

Mis-match in policy coordination

Backyard gardens in Botswana

© SIWI | siwi.org

Short term: Household water access and irrigation expansion are both poverty reduction strategies and subject to water subsidies (all countries)

Long term: Financing of operations and maintenance costs is insufficient to ensure sustainable service provision

Missed opportunitiesBackyard gardening - disregard of water tariffs and access (Botswana) Good examplesConservation agriculture - prevents negative water impacts (Malawi)Protection of basin water resources from pollution and depletion as a means for poverty reduction (Tanzania)

Are water pricing and poverty reduction strategies aligned?

© SIWI | siwi.org

• Agriculture – who is a small-scale/poor farmer?

• Household affordability/life-line water volume - how is it determined?

• Participation and transparency when setting water prices

• Other issues?

Areas for further investigation

© SIWI | siwi.org

Thank [email protected]

Documents

© SIWI | siwi.org Water pricing, poverty and equity Scanning for linkages in southern Africa Dialogues on Water Governance Fortaleza, 23-26 November 2015