Setting User Charges for Urban Water Supply: A Case Study of the Metropolitan Cebu Water District in the Philippines

Abstract

The Asian Development Bank (ADB) has a sound position on user charges, a position that should guide ADB’s policy discussions with borrowing governments. ADB’s practice in reviewing tariffs covers only a few parts of ADB’s position, though, limiting ADB’s potential effectiveness in helping to improve policies. This paper gives an example of the kind of tariff review that could be the basis of policy discussions, and also of project design and analysis. We use the tariff of the Metropolitan Cebu Water District in the Philippines as an example, because the tariff meets and even goes beyond ADB’s position, and is a good model for other water tariffs to follow. The example should be useful to project teams at ADB doing sector studies and processing loans in urban water supply. The paper might also be useful to governments in ADB’s developing member countries, and to partner foreign aid organizations, to help them understand ADB’s position and good practice in urban water supply.