Enabling investment in urban sanitation services through the sustainable full cost recovery principle

Limited access to capital to invest in sanitation is key amongst a range of complex reasons that result in extensive lack of adequate sanitation services. Financing upfront investment has been identified as a particular knowledge gap for many sanitation practitioners. This paper discusses a project to enable participatory learning about financing investment in sanitation infrastructure services for sector practitioners. Findings from a desktop review were deliberated upon through an online discussion leading to fresh insights. The study recognised that leveraging revenue sources beyond tariffs is key to securing the relatively large amounts of upfront finance required, reflecting a departure from the ‘full cost recovery through tariffs’ paradigm. The new paradigm calls for greater commitment from local and national governments to support ongoing sanitation service provision, and ‘sustainable full cost recovery’ of lifecycle costs through a combination of four potential revenue streams (4Ts) – Tariffs from users, Taxes from government, Transfers from donors and Trade profits from the reuse of waste-derived products.