New Water and Waste Water Tariffs and Effluent Charges

Final Reports - Phase 1
Final Reports - Phase 2

The funding of water sector-related investments and the cost coverage for the operation of waste water treatment plants in the Danube River Basin (DRB) countries largely depends on economically and socially acceptable water and wastewater tariffs. Most DRB countries are not currently applying an effective system of fines for water pollution and respective incentives in comparison to industrialized Western European countries. Water and wastewater service tariffs and effluent charges, fines and incentives (Tariffs and Effluent Charges) have the potential to improve both water resource management generally and protection of water bodies from nutrients and hazardous substances.   They may be able to make a substantial contribution towards increasing internal funds and releasing public budgets and thereby facilitate the provision of baseline contributions for new investment projects in nutrient reduction and pollution control. 

The purpose of this Project Component is to develop strategies for tariff and effluent charge introduction and reforms given the prevalent conditions in the various countries of the region and taking into consideration the implementation plans of the EU accession countries. Implementation of Polluter Pays Principle,  economic incentives for pollution reduction and cost recovery of water services are considered as well.  This component has developed policy measures for DRB countries that will help assure economically and socially acceptable tariffs and/or effluent charges. The potential for the increase of revenues of the companies operating in the water and wastewater sector is also being considered. The development and assessment of country-specific concepts for tariff and effluent charge reforms has been completed.

Phase 1 activities principally involved an examination of the current conditions related to regional or Municipal Water and Wastewater Utilities (MWWUs) in eight countries of the region, identification of possible tariff and effluent charge reforms, and evaluation of these prospective reforms.  MWWU case studies have been developed in each of the countries. Baseline physical and monetary accounts for the MWWU were constructed. Budgetary, tariff, service, and effluent consequences of various reforms were tested.  The baseline conditions and simulations were undertaken within the framework of the Accounts Simulation for Tariffs and Effluent Charges (ASTEC) model and numerous individual reform proposals were identified and evaluated.

Phase 2 activities primarily aim to set the basis for implementation with national stakeholders.  This will involve undertaking a series of information dissemination and assistance activities to encourage and expedite adoption of effective reform proposals by the countries and MWWUs of the middle and lower Danube River Basin.  The reform proposals themselves, and the conditions necessary for effective implementation and performance have been elaborated within Phase1. Phase 2 activities would assist national and local decision makers and managers in developing and implementing such reform proposals. Emphasis will also be given to the development, implementation and monitoring of Reform Demonstration Projects in various countries and communities and to disseminate lessons learned.