Financing and Cost Recovery

Rachel Cardone (ERM) and Catarina Fonseca (IRC) (2004)

IRC's Thematic Overview Papers (TOPs) aim to give their readers two kinds of help:

• Easy access to the main principles of the topic - in this case Financing and Cost Recovery - based on worldwide experiences and views of leading practitioners
• Direct links to more detailed explanations and documented experiences of critical aspects of the topic on the world wide web

This TOP provides an overview on financing and cost recovery for the water supply and sanitation services sector in rural and low-income urban areas of developing countries. The first five chapters of the document provide a general overview and are available as webpages, together with Case studies and Mini Reviews of best publications on financing and cost recovery. The full text document, which includes more in-depth information, is available in pdf. The available text gives a grounding and some specialist opinions on issues that are at the heart of efforts to meet the Millennium Development Goals, of halving the proportions of people lacking access to basic water and sanitation services by 2015. Issues like these:

• Community organizations, municipalities and small service providers are failing to generate the revenues required both for capital investments to meet growing demand and for daily operation and maintenance of existing systems.
• Governments, development agencies and communities in different parts of the world are struggling with the issue of decentralization and cost recovery.
• Few countries have realistic policies, operational strategies or plans for cost recovery, let alone plans for the sustainable financing of increased service coverage over time, particularly for the poor.
• Strategies for cost recovery are typically short sighted and address only part of the issue of sustainability (for instance, focusing solely on operation and maintenance costs), and result in degradation of systems and failure to deliver reliable water supply and sanitation services.

These issues need to be addressed urgently. But how, and who will pay? And how do we ensure that poverty is properly addressed?

The TOP has been written for a wide audience and may meet different purposes for different users: policy makers, practitioners, trainers and researchers in the fields of drinking water supply but also those involved in broader programmes for the alleviation of rural poverty and specifically those struggling with financial issues at district, municipal and community level, trying to improve the lives of the poorest of the poor.

The knowledge contained here is based on the many field experiences of experts in the sector and on desk research. At every point, the TOP was designed to be as practical and useful as possible to practitioners who may be struggling with the notion of cost recovery in the water sector, and how to implement cost recovery principles into their work.

Due to time and other constraints, this TOP focuses more on drinking water supply in rural and low-income peri-urban areas than on sanitation. Within the sector, much of the data used and issues discussed are highly controversial, which reflects many of the knowledge gaps and research challenges ahead.

Hopefully, the TOP will inspire you to advocate and put into practice some of the approaches described. As an overview it can cover only the main issues, challenges and lessons learnt on financing and cost recovery. It does, though, also include direct links to more detailed analyses of the different costs involved and how these can be recovered. And, a comprehensive list of web-based resources provides the opportunity to explore each issue in great depth. To find out what this TOP is about, read the Summary before you go into the document.

You'll find the main components of this TOP listed at the bottom of this text. If you want to read the TOP from start to finish go to the Introduction and read the items in the order they occur. You will find these items in the right-hand column under 'Overview', which serves as a basic table of contents. Once you go into the specific webpages, at the bottom of the page it sometimes says "Pages within this article". The phrases underneath this text are what you might call sub headings.

As you read, you will find various temptations to link to other documents with useful and more detailed advice or experiences. In most cases, the underlined link will take you first to an abstract on this website telling you more about the linked document. You may then decide whether to let your browser take you to the full reference for reading, printing or downloading.

- Download:

TOP7_CostRec_03.pdf (1.2 MB)

- Series:

Thematic Overview Papers