The Adoption of the User Pays Option by a Water Authority in a Developing Country: Its Viability

Abstract

In this dissertation the viability of the 'user pays' funding option, in the context of financial considerations, is examined. The setting of that examination is via a case study of a Water Authority operating in a developing country environment - the Solomon Island Water Authority (SIWA). A framework is developed which considers the key elements of accountability and funding and the associated sub-elements of planning and reporting. The development of the framework also considered the water issues of the long term nature of investments, the cost of those investments and the associated financing decisions, the recurrent costs required to maintain those investments and the conflicting claims on resources which normally confront water authorities. In order to test the viability of the 'user pays' option a revenue model is developed which acts to integrate all levels of planning. The revenue model also provides a funding mechanism for assessing the viability of the 'user pays' option by allowing for the running of simulations of that model. It was found through analysis of the revenue model simulations that, in terms of this study, that the 'user pays' option is not a viable option. It is not possible to draw conclusions from this study concerning economic issues such as those found in pricing models. The simulation results simply provide the means for managers to develop strategies to overcome obstacles in meeting the Objectives identified in the Corporate Plan and the associated cost with implementing those objectives in achieving the Corporate Mission Statement.