Comparative Scorecard Assessment of Urban Water Pricing Policies—The Case of Jordan and Iran
Abstract
:1. Introduction
2. Demands on Urban Water Pricing Policies
3. Urban Water Pricing Scorecard Method
3.1. Scorecard Design and Indicators
3.2. Method Development and Data
4. Case Studies
5. Results
5.1. Scoring in Jordan and Iran
5.1.1. Economic Efficiency
5.1.2. Cost Recovery
5.1.3. Equity
5.2. Limitations of the Scorecard
6. Comparison and Discussion
7. Conclusions
Author Contributions
Funding
Conflicts of Interest
References
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Pricing Objectives and Principles | Indicator |
---|---|
Efficiency | |
Marginal Cost E1a | Availability of volumetric pricing (metering) |
Marginal Cost E1b | Price level to water scarcity |
Economic Regulation E2 | Incentive-based economic regulation of water providers |
Competition E3 | Water markets and transfers |
Cost Recovery | |
Financial Viability C1a | Price level |
Financial Viability C1b | Collection Rate |
Commercialization C2 | Level of private-sector participation |
Equity | |
Affordability Q1 | Water expenditure relative to monthly household income |
Accessibility Q2 | Services coverage |
Transparency Q3 | Number of water tariff systems relative to price differentiation |
Participation Q4 | Level of decentralization |
Indicator | Low Performance (1 Point) | Moderate Performance (2 Points) | High Performance (3 Points) |
---|---|---|---|
EI1a | Flat-rate pricing | Mixed system of metering and flat rates | Universal metering used as a pricing policy |
EI1b | Comparatively low prices with high level of water scarcity/comparatively high prices with high water availability | Comparatively high prices, or low with moderate level of water availability | Comparatively high prices with high level of water scarcity/comparatively low prices with high water availability |
EI2 | No regulation of water utilities or regulation using only benchmarking | A mixture of benchmarking regulation and yardstick competition using incentives and punishments in selective cases | Yardstick competition using incentives and punishments as the main form of utilities’ regulation |
EI3 | No markets for urban bulk water | Bulk water markets in some regions | Bulk water markets are widely implemented |
C1a | Average national water price in the supply sector is below 0.4 USD, or utilities do not cover O&M costs | Average national water price in the supply sector is between 0.4 and 1 USD, while most utilities cover O&M | Average national water price in the supply sector is above 1 USD while most utilities cover O&M plus investment costs |
C1b | Collection rate below 80% | Collection rate between 80% and 95% | Collection rate of 95–100% |
C2 | No significant participation of private sector | Forms of public–private partnerships and private sector participation exist | Active role of private sector companies in service provision |
Q1 | Water expenditure relative to income is above 10% | Water expenditure relative to income is 5–10% | Water expenditure relative to income is less than 5% |
Q2 | Service coverage below 70% | Service coverage between 70 and 90% | Service coverage above 90% |
Q3 | High number of tariffs nationwide with big differences between highest and lowest tariff | High number of tariffs, but with no significant price differentiation/high price differentiation with moderate or low number of tariffs | Moderate number of tariffs with no significant price differentiation |
Q4 | National water providers with high level of centralization | Largely decentralized water utilities still dependent (financially and administratively) on national agencies | Financially and administratively independent local or regional water utilities |
Indicator | Scoring Determinants (Successively Investigated) | Data Sources | Description |
---|---|---|---|
EI1a | Urban pricing tariffs; Predominant pricing practices | a, b | |
EI1b | Average national urban water prices; Water scarcity conditions (cross-country comparisons on renewable water availability per capita); National price-to-price levels in countries with similar scarcity conditions | a, c, d | |
EI2 | Economic regulation in the urban water sector; Predominant urban water regulation practices | b, e, h, i | |
EI3 | Country-wide water trading schemes for the urban sector | b, e, h, i | |
C1a | Aggregated data on cost recovery of urban water utilities; Average national water tariffs if adequate cost-recovery data not found | a, g | |
C1b | Per city and national-level collection rate data | a, f | |
C2 | Incidents of private sector participation in the urban water sector; National data on privatization in urban water supply | b, e, h, i | |
Q1 | National client base date in the urban sector, Water expenditure as a percentage of income of different client groups (e.g., % of clients having certain water expenditure/income ratios) | a, f | |
Q2 | National service coverage data | a, g | |
Q3 | Number of urban water tariffs; Average water prices per city | a, f | |
Q4 | Number of independent service providers; Incidents of corporatization and decentralization reforms | b, e, h, i |
Objective | Jordan | Iran | Summary of Justification |
---|---|---|---|
Efficiency | 7 | 6 | Jordan is slightly better-performing on this objective due to a higher price level in the urban sector. |
Marginal Cost E1a | 3 | 3 | Both have universal metering volumetric pricing systems. |
Marginal Cost E1b | 2 | 1 | Price level (for blocks and actual billed) in Jordan comparatively higher but still heavily subsidized while water scarcity is severe and higher than in Iran; urban water price in Iran remains low despite recent increases while scarcity is rapidly increasing. |
Economic Regulation E2 | 1 | 1 | Despite benchmarking being discussed and initiated, particularly in Jordan, both countries have not yet implemented and institutionalized economic regulation. |
Competition E3 | 1 | 1 | There are no water trading schemes for the urban sector in both countries. |
Cost Recovery | 6 | 4 | Jordan performs better due to more effective cost recovery and increased private sector participation. |
Financial Viability C1a | 2 | 1 | Jordan has begun to cover basic O&M costs despite recent serious challenges (e.g., demand increases, refugee crisis); most utilities in Iran do not cover this cost. |
Financial Viability C1b | 2 | 2 | Some utilities face serious challenges to cost recovery in both countries, while stable enforcement mechanisms indicate the national average to still be high. |
Commercialization C2 | 2 | 1 | Unlike Iran, Jordan has implemented PPPs and increased private sector participation. |
Equity | 11 | 8 | Jordan outperforms Iran on equity due to more transparent tariffs and increased levels of local participation. |
Affordability Q1 | 3 | 3 | In both countries, current water bills do not exceed international benchmarks for affordability. |
Accessibility Q2 | 3 | 3 | Both countries have very high services coverage. |
Transparency Q3 | 3 | 1 | In Iran, water prices are highly differentiated with large differences in price levels among tiers and municipalities, while Jordan’s tariff structures are more transparent due to recent simplifications, and a smaller number of cities and providers. |
Participation Q4 | 2 | 1 | Jordan has implemented decentralization reforms giving significant powers to some regional utilities, although some regions remain under centralized services. Iran has not effectively transferred financial independence through decentralization. |
Total | 24/36 | 18/36 |
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Al-Saidi, M.; Dehnavi, S. Comparative Scorecard Assessment of Urban Water Pricing Policies—The Case of Jordan and Iran. Water 2019, 11, 704. https://doi.org/10.3390/w11040704
Al-Saidi M, Dehnavi S. Comparative Scorecard Assessment of Urban Water Pricing Policies—The Case of Jordan and Iran. Water. 2019; 11(4):704. https://doi.org/10.3390/w11040704
Chicago/Turabian StyleAl-Saidi, Mohammad, and Sudeh Dehnavi. 2019. "Comparative Scorecard Assessment of Urban Water Pricing Policies—The Case of Jordan and Iran" Water 11, no. 4: 704. https://doi.org/10.3390/w11040704