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Unformatted text preview: COST RECOVERY: TAKING INTO ACCOUNT THE POOREST AND SYSTEMS SUSTAINABILITY Catarina Fonseca * ABSTRACT: 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 different 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? KEY TERMS: financing, decentralization, poverty, water systems sustainability, rural and low income urban areas INTRODUCTION Drinking water programmes and projects are known to bring wider benefits to communities in the form of health, opportunities for women (Bhatt et al., 2002) and poverty reduction. Given the overall societal gains that can be achieved, water and sanitation services should be improved, especially for the poor. However, in spite of all efforts, the absolute number of people without improved water supply and sanitation services remained practically the same in the last 10 years, and the majority of the people without services are those living in rural or peri-urban communities (WHO/UNICEF 2000). Furthermore, during the 2nd World Water Forum and other sector meetings, it has been recognised that cost recovery is still today one of the major obstacles towards sustainable drinking water (IRC International Water and Sanitation Centre, 2001a). With current rates of population growth, competition for a scarce resource and aging infrastructures, access to drinking water services poses a considerable and growing challenge in developing countries. The financial challenge is particularly acute, largely due to lack of institutional and administrative management capacity at district and regional levels added with an increasing pressure from support agencies and governments for no-free water (IRC, 2001b)....
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- Spring '08