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Water Pricing Experiences and Innovations pp 393–405Cite as

Pricing Urban Water Services in the Developing World: The Case of Guayaquil, Ecuador

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Part of the book series: Global Issues in Water Policy ((GLOB,volume 9))

Abstract

Guayaquil, the largest city in Ecuador, offers a pragmatic and successful approach to pricing urban water services in the developing world. This chapter discusses the underlying principles and lessons learned to finance operations and investments from tariff revenue and subsidies, under a 30-year concession contract awarded in 2001. It reviews price-adjustment mechanisms to account for inflation and meet investment and service targets. It presents strategies followed to cover financing shortfalls to meet poverty and environmental goals. Finally, it summarizes strategic recommendations for other cities of the world.

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Notes

  1. 1.

    The name ECAPAG was changed to EMAPAG to reflect the municipal ownership of the company.

  2. 2.

    It is the yearly average of Intermediate Horizon Equity Risk Premium, as published by the Yearbook, Valuation Edition of Ibbotson Associates (table A-2). This table reflects the risk-free in the US utilizing indexes published by S&P 500.

  3. 3.

    The profit of the concessionaire included in the total cost is calculated with the weighted average cost of capital (WACC) applied to net investments at t period (CC t  × IN t ).

  4. 4.

    Revenue refers to the amount billed and not income after discounting uncollected revenue.

References

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Author information

Authors and Affiliations

  1. CAF Latin America Development Bank, 6024 Stonehenge Place, Rockville, MD, 20852, USA

    Abel Mejía

  2. ECAPAG Empresa Cantonal de Agua Potable y Alcantarillado de Guayaquil, Avenida Francisco de Orellana s/n y Miguel Alcivar, Guayaquil, Republica del Ecuador

    Jose Luis Santos

  3. CAF Latin America Development Bank, Calle 50 y Calle Santo Domingo Edificio Global Bank Piso 40, Oficina 4001, CP 0832, Ciudad de Panamá, Panamá

    Daniel Rivera

  4. UCAB Universidad Católica Andres Bello, Avenida Principal Las Esmeraldas Edificio Santa Marta, Apartamento 301-A La Tahona, Baruta Estado Miranda, Caracas, CP 1083, Venezuela

    Germán E. Uzcátegui

Authors
  1. Abel Mejía
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  2. Jose Luis Santos
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  3. Daniel Rivera
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  4. Germán E. Uzcátegui
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Corresponding author

Correspondence to Abel Mejía .

Editor information

Editors and Affiliations

  1. School of Public Policy, University of California, Riverside, California, USA

    Ariel Dinar

  2. Víctor Pochat Consulting, Buenos Aires, Argentina

    Víctor Pochat

  3. Department of Agricultural Economics, Agrifood Research and Technology Centre CITA-DGA, Zaragoza, Spain

    José Albiac-Murillo

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Mejía, A., Santos, J.L., Rivera, D., Uzcátegui, G.E. (2015). Pricing Urban Water Services in the Developing World: The Case of Guayaquil, Ecuador. In: Dinar, A., Pochat, V., Albiac-Murillo, J. (eds) Water Pricing Experiences and Innovations. Global Issues in Water Policy, vol 9. Springer, Cham. https://doi.org/10.1007/978-3-319-16465-6_20

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