Cost recovery in water and sanitation projects. Final report. Volume 1: main report


The purpose of the project was \"to review and interpret cost recovery mechanisms across a wide range of water and sanitation schemes in order to recommend a portfolio of best practices for achieving financial sustainability and maximising the potential for private sector partnerships\".

The investigation focused particularly on cost recovery for water and sanitation programmes in rural and peri-urban areas. This is because it is here where people are generally the most poor and cost recovery/private sector involvement is presumed to be most difficult. Geographically, DFID requested the research to focus on the experiences and challenges of South Africa and India.

Key research activities included:

  • A literature review;
  • An analysis of data obtained from a survey on cost recovery in the water and sanitation sector;
  • A meta-analysis of willingness to pay papers; and
  • Field visits to projects and policy makers in South Africa and India.

This final report presents our findings to these questions, drawn from across our investigations. The report is composed of five chapters.

  • Chapter one provides some context and rationale to the research and the project;
  • Chapter two examines some of the issues underpinning cost recovery - understanding what demand means; looking at the financial and economic interpretations of cost recovery; using tariffs, subsidies and credit to capture costs; and using cost benefit analysis to design for, and evaluate, success in cost recovery;
  • Chapter three presents the results of the desk based and field research investigations into what seem to be the important issues that influence cost recovery;
  • Chapter four looks specifically at the issue of cost recovery and the chronically poor;
  • Finally, and based upon an assimilation and comparison of the research findings, chapter five presents some practical and strategic recommendations for a framework of principles, within which cost recovering water and sanitation policies, programmes and projects can be designed for poor people in rural or peri-urban areas.


Environmental Resources Management. Cost recovery in water and sanitation projects. Final report. Volume 1: main report. (2003)

Cost recovery in water and sanitation projects. Final report. Volume 1: main report

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