22 Jun 2011

Some for free, pay for more

I met Mike Miller of South Africa last week. He was kind enough to send this interesting paper [PDF] on free basic water in South Africa. His discussion of the political and economic tradeoffs is particularly useful.

Abstract: The South African government’s policy decision in 2001 to provide a basic amount of water free of charge to all citizens has been controversial. Traditional policy advice was that all water should be paid for, even if some costs were subsidized. A review of the implementation of the new policy suggests that the flexible approach adopted ensured wide applicability, although it has been criticized for defects of both exclusion and inclusion. However, it has helped not only to achieve social equity but also has supported the broader objectives of conservation and environmental sustainability. The political legitimacy conferred by the approach has enabled water supply organizations to recover their costs and achieve the economic objective of financial sustainability. South Africa’s experience with free basic water thus demonstrates that addressing social and environmental dimensions together with economic dimensions can lead to more effective and sustainable policy.