Cost recovery of community-managed piped water systems in Ashanti region, Ghana K. B. Nyarko, S. Oduro-Kwarteng & I. Adama Faculty of Civil and Geomatic Engineering, College of Engineering, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana Keywords ability to pay; community management; cost recovery; piped system; tariffs; willingness to pay. Correspondence K. B. Nyarko, Faculty of Civil and Geomatic Engineering, College of Engineering, Kwame Nkrumah University of Science and Technology, Kumasi, Ghana. Tel: +233 20 8165515 Email: nyark10@yahoo.com doi:10.1111/j.1747-6593.2006.00051.x Abstract Recovering the cost of water services is a major obstacle in achieving a sustainable drinking water supply in developing countries. This paper assesses the levels of cost recovery, household willingness and ability to pay for the full supply cost of water services, and financial management. The study was conducted in five out of 30 community-managed piped systems in Ashanti region, Ghana. The study shows that the existing tariffs are not sufficient to recover the full supply cost of the service based on the guidelines of the Government Community Water Supply and Sanitation Agency (CWSA). Using 5% of household income as the ability-to-pay criteria, 67–87% of the house- holds in the five communities could pay the full supply cost of the service. The poor recovery of the supply cost threatens the long-term financial sustainability of the small towns’ water supply sector. Introduction Background Sustainable access to safe water is essential for human health and survival and important for economic growth [Stockholm International Water Institute (SIWI 2005)]. One out of five inhabitants in the world lacks access to safe water supply. In Ghana, about 36% of the population does not have access to safe water (WHO/UNICEF 2004). The situation is even worse in rural and small commu- nities, where the majority of the population resides. There are two main financial challenges for achieving a uni- versal service for drinking water supply. One is the investment required for extending services to those with- out service, whereas the other is for the water systems to be financially self-sufficient, which is the focus of this paper. Recovering the costs related to providing and main- taining a water supply service is essential to enhance sustainability of the service. It is one of the major ob- stacles to achieving sustainable drinking water supply in developing countries despite major efforts in the sector over the past decades. Cost recovery of the service is important to prevent water systems from becoming nonfunctional because of inadequate financing for operations, maintenance, re- pairs and rehabilitation. In community-managed piped systems, cost recovery is affected by the ability and will- ingness of users to pay for the water services and sound financial management (Brikk ´ e & Rojas 2001). A study conducted by Pilgrim (2002) revealed that the failure of small towns’ water supply systems in Ghana to recover the costs of water services could be due to low tariffs, poor management capacity of the Water and Sanitation Devel- opment Board (WSDB) and misuse of funds. Out of the 10 towns (in Eastern and Volta regions) studied by Nyarko et al. (2003), only two were found to be recovering the full cost of the water service. The rest were recovering only the operation and maintenance costs, which does not ensure sustainable service delivery. The objective of this study was to assess the cost recovery levels of water services with respect to the cost recovery policy (recovery of water supply cost), house- hold willingness and ability to pay, and financial manage- ment of some selected community-managed piped water systems in Ashanti region. Cost of water supply services and forms of cost recovery Cost recovery of water services refers to the recovery of all costs associated with a water system, programme or service to ensure long-term sustainability (Cardone & Water and Environment Journal 21 (2007) 92–99 c  2006 The Authors. Journal compilation c  2006 CIWEM. 92 Water and Environment Journal. Print ISSN 1747-6585