- The CRC Series on Competition, Regulation and Development
Edited by Paul Cook and Sarah Mosedale
Chapter 13: Water Subsidies and the Poor
INTRODUCTION It is a Millennium Development Goal that the number of people without sustainable access to safe drinking water should be halved by 2015. But we are not on target to achieve this, particularly in sub-Saharan Africa and in impoverished settlements. This problem is urgent – so what is to be done? How can policy-makers and regulators make it easier for poor people to access safe water? These are questions addressed in this chapter. Until about 15 years ago most water supplies were provided at heavily subsidized rates by the state. However, in many developing countries the poorest and most isolated were not connected to the piped network, so did not beneﬁt from subsidies. Many people, therefore, depended on smallscale, often informal, private water sellers (Mitlin, 2002). As part of the general drive towards pro-market reforms, privatization of the water supply became widely prescribed. It was argued that the state was failing to do the job and that the private sector would be more eﬃcient and so more able to invest in expansion that would beneﬁt the poor. Furthermore, water was to be regarded as an economic good that should be priced to reﬂect its cost because subsidies ‘distort’ the market and fail to encourage the eﬃcient use of water (Mitlin, 2004). Also, less political interference was expected under privatization, making it easier to charge the higher prices needed for investment and to pursue non-payers. Surveys suggested that many poor people would be able to pay...
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