Descriptive Fields
Long-term sustainability and resilience of water services depend on both strong governance and sound financial oversight. In practice, this means combining water pricing, cost recovery strategies, and sustainable financing to ensure the financial viability of services, maintain accessibility, and promote sustainable consumption.
Water pricing is a policy lever that influences how water is valued and used. The choice and design of a pricing model must balance recovery of true service and infrastructure costs with affordability for households and equity across user groups. Cost recovery mechanisms then determine how operations, maintenance and investments are financed, often combining measures such as social tariffs or cross-subsidies to protect vulnerable users.
Finally, sustainable water governance increasingly requires going beyond tariffs alone: innovative financing (e.g., public-private partnerships, green bonds, revolving funds, grants) can help close investment gaps, while Environmental and Resource Costs (ERC) and related financial incentives make it possible to better reflect water’s real value and align economic signals with ecological goals (in line with the Polluter-Pays Principle). Drawing on lessons from InnWater pilot sites (such as progressive water pricing in La Réunion and the integration of ERC in the Brenta basin) this section compares pricing, financing and incentive approaches, highlighting the key trade-offs and the conditions that make them work.