0 - Shillings per litre

Water pricing,
poverty and equity
Scanning for linkages in
southern Africa
Dialogues on Water Governance
Fortaleza, 23-26 November 2015
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Stockholm International Water Institute
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.
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SIWI – a water policy institute with
two offices
SIWI head office
in Stockholm
SIWI Africa
Regional Centre
in Pretoria
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SIWI and Botswana Department for
Water Affairs
• 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
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Southern Africa
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Why policy coherence?
Linkages between poverty reduction and water pricing
Possible synergies
• Access to water and
sanitation > cost effective
poverty reduction (if
financially sustainable, so
that service is continuous)
Possible trade-offs
• Tariffs based on long run
marginal cost of water supply
may equal a large share of
the household budget
• Investment in irrigation
improves food security and
rural livelihood opportunities
• Productivity or job loss for
small enterprises and small
farmers
• Water pollution charges
prevent negative impacts on
downstream users of raw
water (often the poorest)
• Agricultural intensification
may lead to water pollution
or conversion of wetlands
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Primary study questions
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?
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The poor pay more?
Generalized
Price 100
Level
-
7-
~ USD / cubic metre
Shillings per litre
65
4
3
2
1
Collection from free sources / nature
0
The- poorest
Geographic/income variation
The richest
Dar es Salaam, Tanzania. Data from Kjellén, 2006.
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Generalized
Price 100
Level
-
7-
~ USD / cubic metre
Shillings per litre
65
4
3
2
1
Own connection
Collection from free sources / nature
0
The- poorest
Geographic/income variation
The richest
Dar es Salaam, Tanzania. Data from Kjellén, 2006.
Generalized
Price 100
Level
-
7-
~ USD / cubic metre
Shillings per litre
65
4
3
2
Collection from re1
sellers/kiosks
Own connection
Collection from free sources / nature
0
The- poorest
Geographic/income variation
The richest
Dar es Salaam, Tanzania. Data from Kjellén, 2006.
Generalized
Price 100
Level
-
7-
~ USD / cubic metre
Shillings per litre
65
Tankers
4
3
2
Collection from re1
sellers/kiosks
Own connection
Collection from free sources / nature
0
The- poorest
Geographic/income variation
The richest
Dar es Salaam, Tanzania. Data from Kjellén, 2006.
Generalized
Price 100
Level
-
7-
~ USD / cubic metre
Shillings per litre
6Pushcart vendors
5
Tankers
4
3
2
Collection from re1
sellers/kiosks
Own connection
Collection from free sources / nature
0
The- poorest
Geographic/income variation
The richest
Dar es Salaam, Tanzania. Data from Kjellén, 2006.
Generalized
Price 100
Level
Bottled water
-
7-
~ USD / cubic metre
Shillings per litre
6Pushcart vendors
5
Tankers
4
3
2
Collection from re1
sellers/kiosks
Own connection
Collection from free sources / nature
0
The- poorest
Geographic/income variation
The richest
Dar es Salaam, Tanzania. Data from Kjellén, 2006.
Generalized
Price 100
Level
Bottled water
-
7-
Level of Effort
Pushcart vendors
5
Tankers
4
3
2
Collection from re1
sellers/kiosks
Own connection
Collection from free sources / nature
0
The- poorest
Geographic/income variation
Time and labour input
~ USD / cubic metre
Shillings per litre
6-
The richest
Dar es Salaam, Tanzania. Data from Kjellén, 2006.
Southern Africa
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Renewable fresh water resources
per capita in m3
7,000
5,882
6,000
5,000
4,000
3,000
2,000
1,812
1,208
1,044
Botswana
Malawi
1,000
918
869
0
South Africa Tanzania
Zambia
Zimbabwe
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Fresh water withdrawal as % of
internal resources
40
34.3
35
30
27.9
25
20
15
10
8.1
6
6.2
5
2.2
0
Botswana
Malawi
South Africa Tanzania
Zambia
Zimbabwe
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Absolute poverty (% of people living
below national poverty line)
80
72.3
70
60.5
60
50.7
50
40
28.2
30
20
23
19.3
10
0
Botswana
Malawi
South Africa
Tanzania
Zambia
Zimbabwe
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Water pricing policies across countries
• 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
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Botswana
Malawi
South Africa
Tanzania
Zambia
Zimbabwe
Costs that can be recovered through charges
Water supply operation, maintenance and
development
X
X
X
X
X
X
Water resource management (planning,
monitoring etc.)
X
X
X
X
X
X
Wastewater discharge
X
X
X
X
X
X
Opporutnity cost
X
Water scarcity (economic charge)
X
Water research
X
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Poverty reduction across the countries
• 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
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Poverty/equity considerations in water pricing
• 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)
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Water aspects of poverty strategies
• 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
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Backyard gardens in Botswana
• 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
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Are water pricing and poverty
reduction strategies aligned?
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 opportunities
Backyard gardening disregard of water tariffs and
access (Botswana)
Good examples
Conservation agriculture prevents negative water
impacts (Malawi)
Protection of basin water
resources from pollution and
depletion as a means for
poverty reduction (Tanzania)
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Areas for further investigation
• 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?
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Thank you!
[email protected]
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