Utility services of all types have been, and continue to be, subsidised in many parts of the world. But experience shows that widespread subsidies lead to overuse of water resources, discharge of contaminated wastewater, and subsequent environmental problems. User fees that recover the cost of delivering services, such as wastewater treatment, are an essential part of the solution to this problem. It is generally agreed and widely accepted that users should, in most cases, pay for recurring operation and maintenance costs, while there are varying opinions about whether users should pay for capital costs, too, and if so, what percentage is reasonable, and how might it be paid (cash, sweat equity, smaller payments over time coinciding with crop or livestock market season, etc.). However, full cost recovery from water (see figure 1) users is not feasible or even desirable in all situations, for example for wastewater systems where the majority of users are poor.

Figure 1: General principles of full cost of water (Source Klawitter 2004)