Cost recovery : taking into account the poorest and systems sustainability

This paper focuses on financing and cost recovery for the drinking water sector in rural and low-income urban areas. Governments, development agencies and communities in differnt parts of the world are struggling with the issue of decentralization and cost recovery. Few countries have realistic policies, operational strategies or plans for cost recovery and sustainable financing for increased service coverage, particularly for the poor. Community organisations, municipalities and small service providers are failing to generate the revenues needed for either investments to meet growing demand or the daily operation and maintenance of existing systems. All of these groups are in need of guidance and support, in the form of policy and institutional models based on real experience, to develop appropriate financing and cost recovery mechanisms. Due to the lack of such systematic knowledge, strategies for cost recovery are typically short sighted, address only part of the issue of sustainability (for instance, focusing solely on operation and maintenance costs), and result in degradation of systems and failure to deliver reliable water supply and sanitation services. But how, and who will pay? And how to do we ensure that poverty is properly addressed? [taken from author's paper]