The full cost of the water supply services and reasonable levels of cost recovery case study in HoChiMinh city

Abstract

The determination of the full cost of water supply services and the levels of its reasonable cost recovery is very important in the policy decisions related to water supply services and water environmental protection in the face of pressures of water shortage and pollution are increasing. This paper introduces a general framework for the analysis of the full cost of the water supply services and it has applied to analyze, evaluate for a case study in Ho Chi Minh City. This analysis framework focused on three basic components that make up the full cost of water supply services including: (i) the full cost of providing water (financial costs), (ii) opportunity cost of using water (resource cost), and (iii) the environmental cost (environmental and economic damages caused by water sources pollution). On the basis of the evaluated full cost, the levels and mechanism of reasonable cost recovery also be discussed towards three pillars of sustainable development related to water: financial sustainability of water supply services, sustainability in terms of the natural environment, and social adaptability for changes in the water prices.