Trends in the financial system for small-scale water services

Abstract

Objective: Facilities of water services are ageing and need to be renewed. However, renewal efforts are fraught with difficulties in the context of a declining population. These difficulties are acute, because most small-scale water supply services are located in rural areas. This paper illustrates financial systems for small-scale water services, and pays particular attention to the general account transfers, explaining the purpose for which they were introduced, how they have been developed, and efforts to attempt to cope with the problem of a declining population.

Methods: This paper collected secondary literature on the financial system, along with laws and regulations, as well as essays written by administrative officials.

Results: The main financial measures for small-scale water supply services are financial measures for construction and improvement and financial measures for reducing high-level water rates. State subsidies for construction and improvement were introduced with the aim of improving the sanitation conditions in rural villages in the 1950s. Moreover, transfers to the general account and financial measures were undertaken to reduce the financial burden on the inhabitants. These financial measures contributed to the spread of water supply systems, and as water supply services came to be regarded as a universal service, attention was drawn to the issue of water charge disparity. As a result, financial measures were established to correct such disparities. In small-scale water services, the unit cost of the water supply, especially the capital cost, is high, and, all financial measures therefore focus on the capital cost.

Conclusion: Small-scale water services are provided with generous financial measures for capital costs. The financial system for small-scale water services is characterized by the linkage between state subsidies and transfers from the general account of municipalities.