When setting prices for wastewater services a range of aspects has to be considered as the goals pursued with setting prices for wastewater services are varied. They can be set either at the service provider level or by national (or local) government.

As mentioned above, one of the major aims is to recover the costs of service provision and sometimes also the costs resulting from environmental impact caused by wastewater discharge. The traditional approach to cost recovery considers only the financial costs of a project or programme, such as operations and maintenance (O&M) costs, capital costs and possibly investments for future growth and rehabilitation (which includes accounting for depreciation of assets over time). A wider economic perspective considers, in addition to the financial costs, opportunity and environmental costs (and benefits) to society. These include for example the costs of impacts on Environment due to insufficient wastewater treatment and public health costs due to insufficient wastewater treatment. National policy then dictates whether part or all of these costs should be recovered from water users and wastewater dischargers. At a minimum, full supply costs should be recovered in order to ensure sustainability of investment and the viability of service providers. Moreover, the revenue stream should be relatively stable and not cause cash flow or financing difficulties for the utility.

The aims of wastewater charges further include the intention to send appropriate price signals to users about the relationship between water use and treatment costs or environmental damage, respectively, in the case of no or insufficient treatment. Price should therefore be high enough to set an incentive to prevent pollution, i.e. to discharge less or better treated wastewater.

Further on, some other aspects also need to be considered when setting prices for wastewater services:

• Affordability: Prices should make access to sanitation affordable for different income groups as lack of sanitation services has major impacts on human and environmental health resulting in negative effects for all members of a society. The price should, therefore, not be too high to drive consumers to unsafe alternatives of wastewater discharge.

• Fairness and equity:The demand for equity implicates that those who produce more wastewater or wastewater with a higher pollution load also pay more for sewerage and treatment. This usually means that water dischargers pay wastewater bills that are proportionate to the costs they impose on the utility. This would also be in line with the “polluter pays principleâ€?. Fairness, however, might require that the wastewater bill does not account for a disproportional large share of a household’s total income.

• Transparency and feasibility: Complete fulfilment of all of the above mentioned objectives of wastewater charges would imply relatively complex tariff systems as well as intricate monitoring mechanisms (including installation, maintenance and reading of different meters). Administrative expenses for billing and monitoring payment should however be kept financially feasible. When designing tariffs (see below) it should be kept in mind that these should also be easy to explain, understand and implement.

Some of theses objectives, however, might conflict with each other. For example the affordability for poor could require low prices, which do not provide for full cost recovery, or measuring of pollution loads in wastewater might not be administratively feasible.