Water Supply - Costs and Financing

Costs and Financing

The cost of supplying water consists to a very large extent of fixed costs (capital costs and personnel costs) and only to a small extent of variable costs that depend on the amount of water consumed (mainly energy and chemicals). The full cost of supplying water in urban areas in developed countries is about US$1–2 per cubic meter depending on local costs and local water consumption levels. The cost of sanitation (sewerage and wastewater treatment) is another US$1–2 per cubic meter. These costs are somewhat lower in developing countries. Throughout the world, only part of these costs is usually billed to consumers, the remainder being financed through direct or indirect subsidies from local, regional or national governments (see section on tariffs).

Besides subsidies water supply investments are financed through internally generated revenues as well as through debt. Debt financing can take the form of credits from commercial Banks, credits from international financial institutions such as the World Bank and regional development banks (in the case of developing countries), and bonds (in the case of some developed countries and some upper middle-income countries).