EfD Discussion Paper,
Environment for Development, University of Gothenburg

Abstract: 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. Because these services are substantially underpriced in most places, this strategy implies that careful attention must be directed at programs to help the poor manage water affordability. In this paper, we systematize these “customer assistance programs” (CAPs) by defining their major elements and develop a typology that highlights the connection between CAPs and water scarcity. We then present a broad review of evaluations and case studies of CAPs from both industrialized countries and low- and middle-income countries (LMICs). Although several researchers have documented that increasing block tariffs are a poor targeting mechanism for directing subsidies to the poor, there are relatively few careful evaluations of “non-tariff” CAPs, including subsidies to connect households to the network.

Keywords: tariff; water; sanitation

JEL-codes: Q25

35 pages, February 1, 2019

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