L30 & L31: Water User Fees and Cost Recovery

Question 1

Full cost of water includes:

Answer 1

• Operation and management costs
• Capital charges
• Opportunity costs
• Economic externalities
• Environmental externalities

Question 2

service costs:

Answer 2

expenses incurred in providing service, including investment cost, operation costs, replacement costs

Question 3

service charges:

Answer 3

payments made by beneficiaries in order to receive services

Question 4

cost recovery:

Answer 4

degree to which service charges cover service costs

Question 5

What are the four Dublin Principles?

Answer 5

1. Fresh water is a finite and vulnerable resource, essential to sustain life, development and the environment.
2. Water development and management should be based on a participatory approach, involving users, planner and policy markers at all levels.
3. Women play a central part in the provision, management and safeguarding of water.
4. Water has an economic value in all its competing uses and should be recognised as an economic good.

Question 6

Improve cost recovery with:

Answer 6

• financial autonomy
• incentive systems
• transparency
• participation

Question 7

What are the 5 steps to cost recovery?

Answer 7

1. policy, economic and institutional context
2. setting cost recovery and service objectives
3. Investment planning, costing and appraisal
4. basis for charging user fees
5. implementation