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In countries where the demand for sewerage far outstrips the government's ability to provide it, selection based purely on need is not enough. Any long-term policy to provide a service must be based on certain assumptions about how much income the provider will receive from its customers. Where there is equal need, it may only be possible in the first instance to serve communities with a known ability and willingness to pay necessary tariffs, tackling those where higher subsidies may be needed at a later date. |
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A community's ability to pay for a service can be assessed by comparing the likely tariff with the minimum income levels of the majority of the community. It is normally accepted that a family should pay no more than 2 per cent of its income on sanitation. If a measure of cross-subsidy is assumed within the community, tariffs should be less than 2 per cent of the income of the top 80 per cent of families. |
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A community's ability to pay for sewerage is not the same as a willingness to pay for the service. Willingness to pay is related more to the perceived importance of the service than to its cost. In communities where sewerage is a high priority, there may be a willingness to contribute a higher percentage of income than the 2 per cent mentioned previously. Conversely, communities having little desire for sewerage will be unwilling to pay 2 per cent of their income for a service for which they have little demand. Estimates of how much a community is willing to pay for sewerage can be obtained from an analysis of household surveys but this can only be a snapshot of current opinion. A community's opinion of what is a reasonable tariff will change over time, depending on changes in general economic conditions, the length of time a service has been in operation, and the services offered to surrounding communities. It is probably safer to make decisions on cost-recovery based on ability to pay rather than willingness to pay. |
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If a number of the communities are close to each other or close to an existing scheme, there may be some economy of scale if a |
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