Water Resources Management in Peru - Water Pricing

Water Pricing

Water pricing in Peru follows a complex system set out in the water law of 2009, which defines three types of fees and two types of tariffs:(i) fees paid for water abstraction from the environment (Retribuciones economicas por el uso del agua); (ii) fees paid for wastewater discharge to the environment (Retribuciones económicas por vertimiento de uso de agua residual tratada); (iii) tariffs for the use of water infrastructure; (iv) tariffs for water monitoring; and (v) tariffs for sectoral water distribution.

Tariffs for water distribution include irrigation tariffs and drinking water tariffs. These are historically the most important types of tariffs. Drinking water tariffs levied by utilities are approved by the national superintendency for water supply and sanitation, SUNASS. Tariffs are low compared to some neighboring countries, such as Brazil and Chile. Water bills are often not paid. (See water supply and sanitation in Peru). Irrigation tariffs are collected by water user boards. Water is rarely metered and therefore fees are mostly based on area and crop types rather than on volume of water used. Tariffs vary between US$2.2 per ha and US$25.55 per ha, and collection rates vary from 10% in the Amazon and 68% in the Costa region. Farmers contribute in cash through payment of the water tariff and in kind, through labor and materials, following ancestral practices.(See Irrigation in Peru)

All other fees and tariffs have to be approved by the National Water Agency as well as, in the case of abstraction and discharge fees, by the Ministry of Agriculture. The proceeds are to be used for environmental monitoring, prevention, control and remediation; water resources planning; and the operation and maintenance of infrastructure. The level of fees is to be differentiated depending on the type of use, taking into account social, economic and environmental factors. As of 2010, these new fees and tariffs were not yet being collected pending the setting of these fees through subsidiary legislation.