The following figures demonstrate the different prices and monthly bills for water/ wastewater services resulting from different single-part tariff structures (assuming that wastewater bills are calculated based on water consumption).

Figure 2: Price of water versus the quality of water used for selected tariff structures (Source: WSP 2002)

Figure 3: Monthly water bill versus the quality of water used for selected tariff structures (Source: WSP 2002)

Tariffs can be designed and prices set by the service provider or the local or national government. There is no consensus on which tariff structure best balances the objectives of the utility, consumers and society. Tariff design that contributes to the achievement of one objective may be detrimental to the achievement of another. In order to resolve this conflict, policy makers need to decide which objective has the highest priority and, where possible, use more than one instrument. Moreover, performance does not only depend on the choice of tariff structure but also on the level the tariff is set. Therefore setting of tariffs is very much a political process and often implicates controversy. The following table gives an overview on the advantages and disadvantages of different tariff structures.

Table 4: Summary of performance of alternative tariff structures against design objectives (Source: WSP 2002)

Historically, user fees are set (after technical analyses) without the involvement of those affected. However, willingness to pay is not a fixed item that experts can extract from historical data, but a complicated set of preferences and concerns that are only fully sorted out during a participatory process. Participation in setting charge rates can increase willingness to pay, because of an improved understanding of the benefits of wastewater treatment or an increased confidence that services will actually be delivered.