© SIWI | siwi.org Water pricing, poverty and equity Scanning for linkages in southern Africa Dialogues on Water Governance Fortaleza, 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 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 Shillings per litre ~ USD / cubic metre  Geographic/income variation  The poorest The richest Collection from free sources / nature Generalized Price Level The poor pay more? Dar es Salaam, Tanzania. Data from Kjellén, 2006.

Shillings per litre ~ USD / cubic metre  Geographic/income variation  The poorest The richest Collection from free sources / nature Own connection Generalized Price Level Dar es Salaam, Tanzania. Data from Kjellén, 2006.

Shillings per litre ~ USD / cubic metre  Geographic/income variation  The poorest The richest Collection from free sources / nature Collection from re- sellers/kiosks Own connection Generalized Price Level Dar es Salaam, Tanzania. Data from Kjellén, 2006.

Shillings per litre ~ USD / cubic metre  Geographic/income variation  The poorest The richest Collection from free sources / nature Collection from re- sellers/kiosks Own connection Tankers Generalized Price Level Dar es Salaam, Tanzania. Data from Kjellén, 2006.

Shillings per litre ~ USD / cubic metre  Geographic/income variation  The poorest The richest Collection from free sources / nature Collection from re- sellers/kiosks Own connection Pushcart vendors Tankers Generalized Price Level Dar es Salaam, Tanzania. Data from Kjellén, 2006.

Shillings per litre ~ USD / cubic metre  Geographic/income variation  The poorest The richest Collection from free sources / nature Collection from re- sellers/kiosks Own connection Pushcart vendors Bottled water Tankers Generalized Price Level Dar es Salaam, Tanzania. Data from Kjellén, 2006.

Shillings per litre ~ USD / cubic metre Time and labour input  Geographic/income variation  The poorest The richest Collection from free sources / nature Collection from re- sellers/kiosks Own connection Pushcart vendors Bottled water Tankers Generalized Price Level Level of Effort Dar es Salaam, Tanzania. Data from Kjellén, 2006.

© SIWI | siwi.org Southern Africa

© SIWI | siwi.org Renewable fresh water resources per capita in m 3

© 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 Botswana Malawi South Africa Tanzania Zambia Zimbabwe Water supply operation, maintenance and development XXXXXX Water resource management (planning, monitoring etc.) XXXXXX Wastewater dischargeXXXXXX Opporutnity costX Water scarcity (economic charge)X Water researchX 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 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) 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

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