Tariff structures for water and sanitation urban households: a primer

Water tariffs are a powerful management tool. Indeed, they can be seen as a conceptually simple way to promote multiple, possibly conflicting, objectives. Those trade-offs cause discrepancies between stakeholders and may produce undesirable results. The residential urban domain is particularly sensible to those predicaments. To shed some light on the matter, this paper carries out a literature survey on empirical studies, with emphasis on different tariff structures. In total, 185 publications were identified concerning the importance of tariff structures in achieving specific local objectives, or perspectives, of those who demand and supply water. These studies examine, occasionally comparing: (1) the degree to which specific objectives are achieved; (2) how the desired outcomes of a particular structure depend on the customers' sensitivity when receiving a price signal; and (3) the drivers of the decision-makers in the tariff-setting process. A major result is the empirical evidence that the way prices are used matters almost as much as whether they are used or not.