Cost recovery for sanitation services : the case of poor urban areas in Zimbabwe

Abstract

Poor cost recovery has long since been identified as one of the major causes of failure of sanitation programmes. Therefore, current approaches such as the strategic sanitation approach emphasise full cost recovery in urban areas. However, poor sanitation is both a symptom and cause of poverty. There is need therefore, to cushion the urban poor from potential negative effects of full cost recovery policies. Ways through which cost and willingness to pay information could be used to set tariffs which improve cost recovery, without denying the urban poor access to basic sanitation services, are investigated in this thesis. Full cost accounting and the contingent valuation method are used to determine the cost of sanitation services and the willingness of households to pay for these services. The thesis differs from other willingness to pay studies by focusing on those who are unwilling or unable to pay for services.

Low tariffs, and restrictive institutional and regulatory frameworks are identified as major causes of poor sanitation in urban areas of Zimbabwe. The urban poor are willing to pay amounts which are substantially higher than the prevailing tariffs. However, it is found that the urban poor are not a homogeneous group and not all residents can afford to pay for the full capital cost of constructing sanitation facilities or for the recurrent cost of operating services. There is a real danger therefore, that pursuing full cost recovery and basing investment in sanitation solely on willingness to pay may exclude the very poor urban residents. Information on cost and household willingness to pay is used to illustrate the various classes of poor urban residents. Appropriate cost recovery policies are then suggested for each group.

It is recommended that instead of doing nothing or deferring investment in situations where willingness to pay is low, which is what most willingness to pay studies recommend, cost and willingness to pay information should be used to design alternative financing mechanisms which ensure that the very poor have access to basic sanitation services. Such mechanisms include community finance, loan and credit facilities, and subsidies.

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