Water Subsidy Policies : Comparison of the Chilean and Colombian Schemes
Analysis of two water subsidy schemes a means tested subsidy in Chile and a geographically targeted subsidy in Colombia shows that the means-tested system is better able to identify poor households than the geographically targeted scheme. However,...
| Main Authors: | , |
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| Format: | Journal Article |
| Language: | English en_US |
| Published: |
Washington, DC: World Bank
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2003/09/17742630/water-subsidy-policies-comparison-chilean-colombian-schemes http://hdl.handle.net/10986/17185 |
| Summary: | Analysis of two water subsidy schemes a
means tested subsidy in Chile and a geographically targeted
subsidy in Colombia shows that the means-tested system is
better able to identify poor households than the
geographically targeted scheme. However, the overall
distributive impact of both schemes is quite similar, at
least for the three lowest income deciles, because the
amount of benefits per household in the geographically
targeted Colombian scheme are differentiated by the
socioeconomic classification of household. Despite the
relative merits of the Chilean means tested scheme,
targeting errors are still quite large. More than 60 percent
of subsidies accrue to households that are above the third
decile of the income distribution. If the policy objective
in Chile is to benefit a significant proportion of
households in the lowest income deciles, then either the
targeting mechanism must be improved or the number of
subsidies has to increase to take into account these
targeting imperfections. In Colombia almost all households
receive some kind of benefit, implying an unnecessarily high
fiscal cost. An improvement in the targeting mechanism could
lower this cost without jeopardizing benefits to
lower-income households. Some suggestions for additional
research and for improving both schemes are discussed. |
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