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OECD Water Programme. Pillar 1, Output 1 “Pricing Water Resources and Water & Sanitation Services”. World Water Week Stockholm, 16-22 August 2008. Overview. Objectives and scope of the Report Expert Meeting of 14-15 Nov. 2007 Progress to date Draft outline of the Report

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oecd water programme

OECD Water Programme

Pillar 1, Output 1

“Pricing Water Resources and Water & Sanitation Services”

World Water Week

Stockholm, 16-22 August 2008

overview
Overview
  • Objectives and scope of the Report
  • Expert Meeting of 14-15 Nov. 2007
  • Progress to date
  • Draft outline of the Report
  • Conceptual framework
  • Data: The WATSAN pricing survey
  • Next Steps
objectives and scope of the report
Objectives and Scope of the Report

Questions addressed are related to HWP policy questions

  • How to improve the use of water pricing for water service provision to ensure financial sustainability of providers and access by all to affordable services
  • How to improve the use of water pricing and other economic incentives to encourage management of water resources (and associated watersheds) that is both economically efficient and environmentally effective

Scope was defined based on feedback by experts

  • Provide updated survey of current state of the art in pricing literature
  • Identify key challenges and role of pricing in addressing them
  • Identify obstacles faced by policy-makers in designing pricing strategies
  • Develop conceptual framework to help policy-makers address trade-offs
  • Collect and analyse reliable data and case studies (OECD and non-OECD)
  • Provide guidance to improve the effectiveness of water pricing strategies
expert meeting of 14 15 nov 2007
Expert Meeting of 14-15 Nov. 2007

Around 50 participants. Geographic & background diversity.

Expert recommendations regarding the Report:

  • Take this opportunity to clarify key concepts
  • Focus on multiple policy objectives and trade-offs between them
  • Look beyond the pricing of water services
  • Look beyond prices. Focus on their determinants, e.g. costs
  • Address the political economy of reform
  • Contextualise results and policy guidance

In addition, the experts suggested the following:

  • OECD as a “Water Observatory”
  • Broad consultation strategy on the Report

4

progress to date
Progress to Date

Since the Expert Meeting of Nov.2007, the Secretariat:

  • Defined a conceptual framework and draft outline
  • Collected data on water and wastewater tariffs for domestic and industrial users
  • Identified information gaps
  • Launched consulting contracts for studies (more needed)
  • Ensured coordination within the HWP
  • Carried out extensive external coordination and consultation, aimed at validating & disseminating results
draft outline of the report
Draft Outline of the Report
  • The policy context
    • Key threats and challenges
    • Where des the policy debate stand?
  • The conceptual framework
    • Multiple policy objectives and the trade-offs between them
  • Experiences from OECD & non-OECD countries
    • Investment needs and costs of operation, maintenance, replacement
    • Pricing policies and trends
  • Policy analysis
      • Performance of pricing strategies to address policy objectives, tradeoffs
  • From theory to practice: The political economy of reform
    • Institutional, political and implementation issues
    • Implementing pricing policy reforms: towards the virtuous circle
  • Policy conclusions
conceptual framework
Conceptual Framework
  • Water as a multi-faceted commodity: Need to tailor pricing
    • Natural vs. man-made capital
    • Different types of WATSAN services
  • Key policy challenges
    • Water resources availability and quality
    • Sustainable and affordable access to adequate WATSAN services for all
  • Conflicting policy objectives: 4 sustainability dimensions
    • Ecological, economic, financial and social sustainability
    • Understanding the trade-offs
  • Implications for the design of water pricing policies
    • Different conceptions of “pricing” in relation with the four sustainabilities
    • Understanding the water value chain

This framework also informs the scoping paper for the Pricing Strategies topic of the Finance Theme for the 2009 World Water Forum

data the watsan pricing survey
Data: The WATSAN Pricing Survey
  • A survey of 171 OECD and 85 non-OECD utilities was carried out in collaboration with Global Water Intelligence (GWI)
  • A consultant, working within the Secretariat, collected publicly available data on pricing for domestic and industrial users
  • Information gaps were identified on, among other issues:
    • Costs: levels, components, efficiency, cost recovery levels
    • Institutional framework aspects
  • Ongoing work aimed at minimizing work for country experts and maximising utility of collected information for use in the Report
  • Main challenges:
    • Closing the information gaps, especially on costs/efficiency
    • Relevant geographic level of data collection and analysis, aggregation
  • Experts’ recommendation: OECD as a “Water Observatory”?

Possible synergies with existing OECD databases

thank you
Thank you!!

www.oecd.org/water/

slide13

Economic and financial flows in WS&S

Taxation

Public budget

Owner of

property rights on

water resources

Responsible entity

Dividends

Capital gain

Royalties

Transfers

Water taxes

Bulk supply

operators

Ear-marked

subsidies

Lease canons

Asset

ownership

Private partner

Investment

Maintenance

Renewal

Extension

Dividends

Operator

Industrial costs

Financial costs

Transfer prices

Tariffs

Consumers

Industrial costs

Financial costs

Fiscal

I market

Direct cost of self-supply

Industrial costs

Financial costs

II market

Market for goods, services,

labour & capital

III market

IV market

slide15

Ecological constraints

Desired Environmental functions

Stakeholder 3 ...

… Stakeholder n

Stakeholder 2

Stakeholder 1

Available Environmental Functions

Water Management Infrastructure

Institutional constraints

Environmental and Economic

Sustainability Indicators

Stakeholders satisfaction

Indicators

The conceptual framework for Carrying Capacity

Governance Issues

Taxes / subsidies

Price / cost

slide16

Subsidies

Public budget

WMS1

WMS2

WMSn

Taxes

Water charges

Water users

Public budget

WMS1

WMS2

WMSn

Water users

slide17

Ear-marked subsidies (contribution to investment)

Regional water agencies

Ear-marked taxes

WMS1

WMS2

WMSn

Water charges

Water users

Bulk prices (equal)

Bulk suppliers

WMS1

WMS2

WMSn

Water charges

Water users