Incentive-Based Subsidies: Designing Output-Based Subsidies for Water Consumption
Author: Andres Gomez-Lobo Date: 6/1/2001 (PDF, 200KB)
To guarantee adequate and affordable water and sanitation services for vulnerable households, Chile introduced an individual means-tested water consumption subsidy a decade ago. Although the public authorities determine how the subsidy is applied, the mostly private companies deliver the service--under a scheme with built-in incentives to ensure cost-effective service delivery by the companies and low wastage by the customers.