IDDRI and IRD conducted between 2009 and 2012 a research programme on the full cost of basic services in developing cities. Based on the concept of sustainable water cost recovery by various actors, it aimed at studying the issues of governance and financing in the long term. Three empirical studies (Niger, Vientiane-Laos and Casablanca-Morocco) have highlighted the actual formation and sharing modalities of the costs. This Brief presents the results of this research programme, and particularly the fact that political, institutional and territorial conditions are decisive for sustainable financing of basic services.
- The principle of full cost recovery through tariffs is unrealistic: although progressive tariffs enable cross-subsidies between users and ensure service delivery, investments come from external pre-financing, which dilutes the burden of costs over time.
- Beyond the utility provider’s public or private status and the investments to be mobilised, sector governance and provider’s management procedures are crucial to ensuring sector efficiency, and even to identifying potential hidden resources.
- The institutional and social conditions of a territory and the informality of urbanisation and local governance generate additional costs which, if ignored, compromise the full, long-term equilibrium of financing.
- Empirical studies of the components of these costs would help to better anticipate real needs in the long term and to integrate territorial externalities into financing schemes.