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W ater pricing, poverty and equity

This study explores the linkages between water pricing, poverty reduction, and equity in Southern Africa. It examines the impact of water pricing mechanisms on different income groups and investigates the alignment between water pricing and poverty reduction strategies. The study also considers possible trade-offs and synergies between water pricing and poverty reduction efforts. The findings aim to inform policy decisions regarding water pricing and poverty reduction in the region.

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W ater pricing, poverty and equity

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  1. Water pricing, poverty and equity Scanning for linkages in southern Africa Dialogues on Water Governance Fortaleza, 23-26 November 2015

  2. Stockholm International Water Institute 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 1991 80 staffmembers + 10 associated experts Supportedby the Swedish government, City of Stockholm and foundersof the Stockholm Water Prize. Programmes and activitiesalsofunded by multi- and bilateral donors and international organisations/agencies.

  3. SIWI – a water policy institute with two offices SIWI headoffice in Stockholm SIWI Africa Regional Centre in Pretoria

  4. SIWI and Botswana Department for Water Affairs • 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

  5. Southern Africa

  6. Why policy coherence? Linkages between poverty reduction and water pricing Possibletrade-offs Tariffs based on long run marginal costofwatersupplymayequal a largeshareof the household budget Productivity or job loss for small enterprisesand small farmers Agricultural intensification may lead to water pollution or conversion of wetlands Possiblesynergies Access to water and sanitation> costeffectivepovertyreduction (iffinanciallysustainable, so that service is continuous) Investment in irrigation improvesfoodsecurity and rural livelihoodopportunities Water pollution charges prevent negative impacts on downstreamusersofrawwater (often the poorest)

  7. Primary study questions 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?

  8. The poor pay more? GeneralizedPriceLevel 100 - 7 - 6 - 5 - Shillings per litre ~ USD / cubic metre 4 - 3 - 2 - 1 - Collection from free sources / nature 0 - Geographic/income variation The poorest The richest Dar es Salaam, Tanzania. Data from Kjellén, 2006.

  9. GeneralizedPriceLevel 100 - 7 - 6 - 5 - Shillings per litre ~ USD / cubic metre 4 - 3 - 2 - 1 - Own connection Collection from free sources / nature 0 - Geographic/income variation The poorest The richest Dar es Salaam, Tanzania. Data from Kjellén, 2006.

  10. GeneralizedPriceLevel 100 - 7 - 6 - 5 - Shillings per litre ~ USD / cubic metre 4 - 3 - 2 - 1 - Collection from re-sellers/kiosks Own connection Collection from free sources / nature 0 - Geographic/income variation The poorest The richest Dar es Salaam, Tanzania. Data from Kjellén, 2006.

  11. GeneralizedPriceLevel 100 - 7 - 6 - 5 - Shillings per litre ~ USD / cubic metre Tankers 4 - 3 - 2 - 1 - Collection from re-sellers/kiosks Own connection Collection from free sources / nature 0 - Geographic/income variation The poorest The richest Dar es Salaam, Tanzania. Data from Kjellén, 2006.

  12. GeneralizedPriceLevel 100 - 7 - 6 - 5 - Pushcart vendors Shillings per litre ~ USD / cubic metre Tankers 4 - 3 - 2 - 1 - Collection from re-sellers/kiosks Own connection Collection from free sources / nature 0 - Geographic/income variation The poorest The richest Dar es Salaam, Tanzania. Data from Kjellén, 2006.

  13. GeneralizedPriceLevel Bottled water 100 - 7 - 6 - 5 - Pushcart vendors Shillings per litre ~ USD / cubic metre Tankers 4 - 3 - 2 - 1 - Collection from re-sellers/kiosks Own connection Collection from free sources / nature 0 - Geographic/income variation The poorest The richest Dar es Salaam, Tanzania. Data from Kjellén, 2006.

  14. GeneralizedPriceLevel Bottled water 100 - Level of Effort 7 - 6 - 5 - Pushcart vendors Time and labour input Shillings per litre ~ USD / cubic metre Tankers 4 - 3 - 2 - 1 - Collection from re-sellers/kiosks Own connection Collection from free sources / nature 0 - Geographic/income variation The poorest The richest Dar es Salaam, Tanzania. Data from Kjellén, 2006.

  15. Southern Africa

  16. Renewable fresh water resources per capita in m3

  17. Fresh water withdrawal as % of internal resources

  18. Absolute poverty (% of people living below national poverty line)

  19. Water pricingpoliciesacrosscountries • 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

  20. Costs that can be recovered through charges

  21. Povertyreductionacross the countries • 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

  22. Poverty/equity considerations in water pricing • 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)

  23. Water aspects of poverty strategies • Extending access to water supply and sanitation • Development of irrigation infrastructure • Conservation agriculture (Malawi) • Protectionofbasin water resources from pollution and depletion(Tanzania) • Work for Water (eradicateinvasive species) (SA) • But: land and water reforms oftendisconnected

  24. Backyard gardens in Botswana • The PovertyEradicationProgramme ”package” for backyardgardening has providedgardeningtools to 3078 poorhouseholds • Water access or ability-to-pay not considered – somewater bills cancelled by government • Mis-match in policy coordination

  25. Are water pricing and poverty reduction strategies aligned? Missedopportunities Backyard gardening - disregardofwater tariffs and access (Botswana) Goodexamples Conservationagriculture - prevents negative waterimpacts (Malawi) Protectionofbasinwaterresources from pollution and depletion as a means for povertyreduction (Tanzania) Short term:Householdwater access and irrigation expansion arebothpovertyreductionstrategies and subject to water subsidies (all countries) Long term: Financingof operations and maintenancecosts is insufficient to ensuresustainable service provision

  26. Areas for further investigation • Agriculture – who is a small-scale/poor farmer? • Householdaffordability/life-linewatervolume- how is it determined? • Participation and transparencywhensettingwaterprices • Otherissues?

  27. Thank you! johanna.sjodin@siwi.org

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