Water as an Economic Good

Cost Recovery, Water Pricing, Billing Efficiency and Asset Management

This Chapter covers the 4th Dublin principle, ‘water as an economic good’ that emphasizes that water, apart from being a basic good to be provided to all citizens, also needs to be seen as an economic good that comes at a price that needs to reflect the overall cost of providing it meaning the sum of capital and operational costs and ideally also the environmental costs. With urban water and sanitation providers, this meant, a.o. a new focus on cost recovery, billing efficiency and asset management.

Towards the start of the 1990’s, global concern with water scarcity and water pollution was growing, and economic and environmental issues, along with good governance, private sector participation, and other elements of the post-Cold War development paradigm, began to assume more importance. The core principles of the new consensus were most succinctly articulated at the International Conference on Water and the Environment, held in Dublin in January 1992 in the run-up to the Earth Summit.

They were expressed as follows:
• Fresh water is a finite and vulnerable resource, essential to sustain life, development and the environment
• Water development and management should be based on a participatory approach, involving users, planners and policymakers at all levels
• Women play a central part in the provision, management and safeguarding of water, and
• Water has an economic value in all its competing uses and should be recognized as an economic good.

If you want to know more about i) cost recovery, ii) water tariffs and iii) billing and collection efficiency, please click the following link.