In order to be sustainable, wastewater management does not only have to provide for the protection of human health and environmental, but also has to do this in a manner that is economically and socially feasible in the long-term. Economic instruments, such as service fees and effluent charges can complement the use of institutional, regulatory, and technical tools to foster sustainability in wastewater management.

A basic principle of economic instruments used in environmental management is the “polluter pays principle�. This principle states that anyone whose actions pollute or adversely affect the Environment should pay the cost for remedial action. Consequently, activities which are less damaging will incur a lesser cost, and therefore be more economically justifiable. Linked with this principle is also the demand for full recovery of the costs linked to the provision of sanitation services and wastewater management through water users and wastewater dischargers. As explained in lesson D1 supply of wastewater management services is linked with a variety of costs. These costs include investment costs as well as operation and maintenance costs for wastewater treatment facilities and sewerage networks. Furthermore, costs accrue from pollution of surface waters in consequence of discharge of treated (or untreated) wastewater.

The use of economic instruments can help to cover the costs related to wastewater management and provide incentives for the pollution prevention. The following chapter provides an overview on economic instruments used in wastewater management and focuses on the different options for wastewater service fees.