Water tariff design in developing countries: Disadvantages of increasing block tariffs and advantages of uniform price with rebate designs

Discussion Paper
1 January 2000

Increasing block tariffs (IBTs), widely used in the developing world, are claimed to produce desirable income transfers, discourage wasteful use, promote economic efficiency, and assure access to sufficient water for basic sanitation. In fact, these claims are either excessive or incorrect. In practice, IBTs are likely to promote inefficiency, inequity, unfairness, net revenue instability, and other negative consequences. An alternative tariff design, a uniform price with rebate (UPR), is presented.

In practice, IBTs are likely to promote inefficiency, inequity, unfairness, net revenue instability, and other negative consequences. An alternative tariff design, a uniform price with rebate (UPR), is presented. A revenue-neutral comparison, using developing country data, shows the UPR to outperform the IBT on all counts, while avoiding certain undesirable aspects of IBTs.

Topics
Sustainable Development Goals

Request a publication

Due to Copyright we cannot publish this article but you are very welcome to request a copy from the author. Please just fill in the information beneath.

Authors I want to contact
Publication | 24 August 2007