Cost Recoverable Tariffs to Increase Access to Basic Services among Poor Households

Publication | March 2013

This paper presents a methodological approach to identifying tariff structures that ensure cost recovery for the provider while increasing take-up of basic services among the poor.

The design of alternative tariff structures can serve as a low-cost and effective tool in achieving higher take-up of basic services among poor households while allowing the provider to recover costs. A contingent valuation survey from the Water Supply and Sanitation Project of the Asian Development Bank in Cebu, Philippines is used to show that tariff structures with a low one-time connection price and price differentiates based on wealth measures can result in a five-fold increase in the take-up of water services by poor households over the base tariff structure. More moderate impacts, however, are found for the take-up of new sanitation and sewage services.


  • Abstract
  • Introduction
  • Estimating Demand Using Contingent Valuation Surveys
  • Pricing Strategies Under Two-Part Tariffs
  • Example: Price-Demand Simulations for Water and Sanitation Services in Cebu, Philippines
  • Discussion
  • Conclusion
  • References