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
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
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
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)