New Policy Brief on the Role of Water Pricing in Improving Water Use Efficiency in Central Asia

The critical issue in water sector financing of Central Asia is that the revenue from water fees is insufficient to cover the costs of operation and maintenance, or upgrading of the existing infrastructure, leading to a situation where water supply is insufficient as well as unreliable. CAREC Institute’s newly produced policy brief integrates a review of academic literature, the analysis of current policy frameworks and the empirical evaluation of the current situation in Central Asia related to the role of water pricing in improving water use efficiency.

Treating water as an entirely free or cheap public good typically leads to overuse and exploitation with no incentive for water saving. Unreliable water supply leads to reluctance in paying water fees, undermining operational budgets for water systems.

Realistic pricing of water is crucial in supporting responsible use, generating funds for development purposes as well as reducing the waste of water. However, careful implementation is required during price reform so that water stays affordable and market chains are maintained, and vulnerable groups can still have access to water.

Central Asia should prioritize a shift towards cost-reflective water pricing, ensuring prices align better with the true cost of providing reliable water services. This will incentivize conservation and generate essential revenue. Strengthening fee collection through investments in metering, billing, and enforcement is equally crucial.  Finally, promotion of water-efficient technologies, especially within agriculture, is needed.

For Central Asia population, water should be recognized not only as a natural resource but also as an economically valuable good. The step-by-step introduction of full-cost pricing (with support for those who are most vulnerable) is pivotal. Improved revenue collection systems, through better billing, metering, and enforcement are vital to ensure water providers are properly funded.

Central Asia urgently needs to address its unsustainable dependence on heavily subsidized water. Gradual, yet decisive, shifts towards cost-reflective pricing, balanced with measures to protect those most at risk, are necessary.