Estimating the Magnitude of Water Supply and Sanitation Subsidies
The water supply and sanitation sector remains heavily subsidized around the world. Yet, the accounting of water supply and sanitation subsidies globally has proved challenging due to utility-level data limitations and their often implicit nature....
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/879091603290352424/Estimating-the-Magnitude-of-Water-Supply-and-Sanitation-Subsidies http://hdl.handle.net/10986/34656 |
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okr-10986-346562022-09-20T00:10:36Z Estimating the Magnitude of Water Supply and Sanitation Subsidies Andres, Luis Espineira, Gonzalo Joseph, George Sember, German Thibert, Michael WATER SUPPLY AND SANITATION WATER SUBSIDY WATER UTILITY WATER AND SANITATION INFRASTRUCTURE The water supply and sanitation sector remains heavily subsidized around the world. Yet, the accounting of water supply and sanitation subsidies globally has proved challenging due to utility-level data limitations and their often implicit nature. This paper develops a methodology to estimate water supply and sanitation subsidies that is adaptable to data scarce environments, while accounting for differences among service providers such as population served (to account for economies of scale), coverage of water and sanitation services individually, and their level of operational efficiency in terms of water losses and staffing. This methodology is based on Chile’s empresa modelo (model firm) approach to cost-reflective tariff estimation and uses utility-level data from the World Bank's International Benchmarking Network for Water and Sanitation Utilities database. The results suggest that the cost of subsidies associated with the operations, maintenance, and major repair and replacement of existing water supply and sanitation infrastructure in much of the world (excluding, notably, China and India) is an estimated $289 billion to $353 billion per year, or 0.46 to 0.56 percent of the countries' combined gross domestic product. This figure rises, shockingly, to 1.59 to 1.95 percent if only low- and middle-income economies are considered, an amount largely due to the capital subsidies captured in the estimation. Subsidies of operating costs account for approximately 22 percent of the total subsidy amount in the full sample and for low-income economies separately. Annual subsidy amounts by region range from 0.05 to 2.40 percent of gross domestic product, and low-income economies are generally at the high end of this range. The estimations do not include capital expenditure for infrastructure expansion -- which tends to be fully subsidized -- or environmental costs. Therefore, the actual global magnitude of networked water supply and sanitation subsidies is much greater than the estimation. 2020-10-22T18:13:32Z 2020-10-22T18:13:32Z 2020-10 Working Paper http://documents.worldbank.org/curated/en/879091603290352424/Estimating-the-Magnitude-of-Water-Supply-and-Sanitation-Subsidies http://hdl.handle.net/10986/34656 English Policy Research Working Paper;No. 9448 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean Chile |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
WATER SUPPLY AND SANITATION WATER SUBSIDY WATER UTILITY WATER AND SANITATION INFRASTRUCTURE |
| spellingShingle |
WATER SUPPLY AND SANITATION WATER SUBSIDY WATER UTILITY WATER AND SANITATION INFRASTRUCTURE Andres, Luis Espineira, Gonzalo Joseph, George Sember, German Thibert, Michael Estimating the Magnitude of Water Supply and Sanitation Subsidies |
| geographic_facet |
Latin America & Caribbean Chile |
| relation |
Policy Research Working Paper;No. 9448 |
| description |
The water supply and sanitation sector
remains heavily subsidized around the world. Yet, the
accounting of water supply and sanitation subsidies globally
has proved challenging due to utility-level data limitations
and their often implicit nature. This paper develops a
methodology to estimate water supply and sanitation
subsidies that is adaptable to data scarce environments,
while accounting for differences among service providers
such as population served (to account for economies of
scale), coverage of water and sanitation services
individually, and their level of operational efficiency in
terms of water losses and staffing. This methodology is
based on Chile’s empresa modelo (model firm) approach to
cost-reflective tariff estimation and uses utility-level
data from the World Bank's International Benchmarking
Network for Water and Sanitation Utilities database. The
results suggest that the cost of subsidies associated with
the operations, maintenance, and major repair and
replacement of existing water supply and sanitation
infrastructure in much of the world (excluding, notably,
China and India) is an estimated $289 billion to $353
billion per year, or 0.46 to 0.56 percent of the
countries' combined gross domestic product. This figure
rises, shockingly, to 1.59 to 1.95 percent if only low- and
middle-income economies are considered, an amount largely
due to the capital subsidies captured in the estimation.
Subsidies of operating costs account for approximately 22
percent of the total subsidy amount in the full sample and
for low-income economies separately. Annual subsidy amounts
by region range from 0.05 to 2.40 percent of gross domestic
product, and low-income economies are generally at the high
end of this range. The estimations do not include capital
expenditure for infrastructure expansion -- which tends to
be fully subsidized -- or environmental costs. Therefore,
the actual global magnitude of networked water supply and
sanitation subsidies is much greater than the estimation. |
| format |
Working Paper |
| author |
Andres, Luis Espineira, Gonzalo Joseph, George Sember, German Thibert, Michael |
| author_facet |
Andres, Luis Espineira, Gonzalo Joseph, George Sember, German Thibert, Michael |
| author_sort |
Andres, Luis |
| title |
Estimating the Magnitude of Water Supply and Sanitation Subsidies |
| title_short |
Estimating the Magnitude of Water Supply and Sanitation Subsidies |
| title_full |
Estimating the Magnitude of Water Supply and Sanitation Subsidies |
| title_fullStr |
Estimating the Magnitude of Water Supply and Sanitation Subsidies |
| title_full_unstemmed |
Estimating the Magnitude of Water Supply and Sanitation Subsidies |
| title_sort |
estimating the magnitude of water supply and sanitation subsidies |
| publisher |
World Bank, Washington, DC |
| publishDate |
2020 |
| url |
http://documents.worldbank.org/curated/en/879091603290352424/Estimating-the-Magnitude-of-Water-Supply-and-Sanitation-Subsidies http://hdl.handle.net/10986/34656 |
| _version_ |
1764481367936073728 |