1. Water Charges 1 Corinne Waelti, seecon international gmbh

2. Water Charges Find this presentation and more on: www.sswm.info.www.sswm.info Copy it, adapt it, use it – but acknowledge the source! Copyright Included in the SSWM Toolbox are materials from various organisations and sources. Those materials are open source. Following the open- source concept for capacity building and non-profit use, copying and adapting is allowed provided proper acknowledgement of the source is made (see below). The publication of these materials in the SSWM Toolbox does not alter any existing copyrights. Material published in the SSWM Toolbox for the first time follows the same open-source concept, with all rights remaining with the original authors or producing organisations. To view an official copy of the the Creative Commons Attribution Works 3.0 Unported License we build upon, visit http://creativecommons.org/licenses/by/3.0. This agreement officially states that: http://creativecommons.org/licenses/by/3.0 You are free to: Share - to copy, distribute and transmit this document Remix - to adapt this document. We would appreciate receiving a copy of any changes that you have made to improve this document. Under the following conditions: Attribution: You must always give the original authors or publishing agencies credit for the document or picture you are using. Disclaimer The contents of the SSWM Toolbox reflect the opinions of the respective authors and not necessarily the official opinion of the funding or supporting partner organisations. Depending on the initial situations and respective local circumstances, there is no guarantee that single measures described in the toolbox will make the local water and sanitation system more sustainable. The main aim of the SSWM Toolbox is to be a reference tool to provide ideas for improving the local water and sanitation situation in a sustainable manner. Results depend largely on the respective situation and the implementation and combination of the measures described. An in-depth analysis of respective advantages and disadvantages and the suitability of the measure is necessary in every single case. We do not assume any responsibility for and make no warranty with respect to the results that may be obtained from the use of the information provided. Copyright & Disclaimer

3. Water Charges Find this presentation and more on: www.sswm.info.www.sswm.info Contents 1. Introduction to Economic Tools 2. What are Water Charges? 3. Implementing Water Charges 4. Conclusion 5. References 3

4. Water Charges Find this presentation and more on: www.sswm.info.www.sswm.info The Economist’s View: Externalities 4 1. Introduction to Economic Tools Source: SAVENIJE & VAN DER ZAAG (2002) Externalities arise because a substantial part of the costs of economic activities is not being paid by the actors responsible but by the general public in form of environmental damage, security, or long-term climatic risks.

5. Water Charges Find this presentation and more on: www.sswm.info.www.sswm.info...people change their behaviour because the want to achieve maximal benefit at minimal cost. Economic Tools involve the use of prices and other market-based instruments to provide monetary incentives to change behaviour. 1. Introduction to Economic Tools Tools: Water pricing (tariffs) Subsidies Charges (irrigation, wastewater) Tradable water rights Etc. Source: http://www.wsp.org/userfiles/image/november2002.jpg [Accessed: 23.03.2010] 5 With Economic Tools…

6. Water Charges Find this presentation and more on: www.sswm.info.www.sswm.info Definition and Impact of Charges 6 2. What are Water Charges? A charge can be defined as a ‘price’ paid on the use of the environment in order to internalise negative externalities. Behavioural change occurs, if it is less expensive than paying the charge. Less consumption or pollution can be achieved by: Less production by firms More efficient production technologies (innovation)

7. Water Charges Find this presentation and more on: www.sswm.info.www.sswm.info Different Types of Water Charges 7 2. What are Water Charges? Emission/effluent charges: fee on the discharged pollutant (based on its quantity or quality) User charges: e.g. fees for the use of drinking water and wastewater treatment facilities Product charges: levied on products that are harmful to surface or ground water) Administrative charges: fees paid to authorities

8. Water Charges Find this presentation and more on: www.sswm.info.www.sswm.info With the collected charges, more revenue is available to the government for reallocation. Requirements 8 3. Implementing Water Charges Measuring the emissions or effluents Setting an appropriate fee level Collecting the due amounts Allocating the collected amounts Source: ANDERSON (2002)

9. Water Charges Find this presentation and more on: www.sswm.info.www.sswm.info Weak institutional capacity Inadequate institutional co-ordination Economic instability Government or polluter resistance or inertia Hindering forces 9 3. Implementing Water Charges Source: STAVINS & WHITEHEAD (1992)

10. Water Charges Find this presentation and more on: www.sswm.info.www.sswm.info Internalisation of negative externalities Incentives for innovations in order to reach more efficient production technologies The implementation process is hard to control There may be a lack of strong enforcement bodies Resistance by polluters and/or the government is possible High monitoring costs It is difficult to set an optimal standard due to limited information Advantages and Disadvantages 10 4. Conclusion

11. Water Charges Find this presentation and more on: www.sswm.info.www.sswm.info ANDERSON, R. (2002): Incentive-Based Policies for Environmental Management in Developing Countries. Issue Brief 02-07. Washington D.C.: Resources for the Future (RFF). URL: http://www.rff.org/Publications/Pages/PublicationDetails.aspx?PublicationID=9616 [Accessed: 14.06.2012]. http://www.rff.org/Publications/Pages/PublicationDetails.aspx?PublicationID=9616 KRAEMER, R., KAMPA, E., INTERWIES, E. (2004): The Role of Tradable Permits in Water Pollution Control. Brussels: Ecologic, Institute for International and European Environmental Policy. URL: www.ecologic.de/download/projekte/1850-1899/1872- 03/1872-03_tradable_permits.PDF [Accessed: 08.08.2012].www.ecologic.de/download/projekte/1850-1899/1872- 03/1872-03_tradable_permits.PDF SAVENIJE, J., ZAAG, P. van der (2002): Water as an Economic Good and Demand Management. Paradigms with Pitfalls. International Water Resources Association. In: Water International 27, 98-104. URL: www.colorado.edu/geography/class_homepages/geog_4501_s12/readings/watereconomicgood.pdf [Accessed: 08.08.2012]. www.colorado.edu/geography/class_homepages/geog_4501_s12/readings/watereconomicgood.pdf STAVINS, R.; WHITEHEAD, B. (1992): Pollution Charges for Environmental Protection. A Policy Link Between Energy and Environment. In: Annual Reviews Energy Environment 17, 187-210. URL: http://www.annualreviews.org/doi/abs/10.1146/annurev.eg.17.110192.001155?journalCode=energy.2& [Accessed: 14.06.2012]. http://www.annualreviews.org/doi/abs/10.1146/annurev.eg.17.110192.001155?journalCode=energy.2& 5. References 11

12. Water Charges 12 “Linking up Sustainable Sanitation, Water Management & Agriculture” SSWM is an initiative supported by: Created by: