Financial Aspects
Tariff level Water tariffs in Chile differ substantially between regions, reflecting differences in the cost of supplying water. Tariffs in urban areas varied between US$0.8 (Aguas Manquehue in Chicureo) per cubic meter and US$ 4.1 (Aguas Patagonia in Coyhaique) per cubic meter in 2006. In rural areas, tariffs only cover operation and maintenance costs
Affordability On average, the water and sanitation bill accounted for 1.14% of household income according to a 1998 survey by the National Statistical Institute. They varied between 0.77% for the highest (wealthiest) quintile and 2.35% for the lowest (poorest) quintile.
Financing and Subsidies Urban water and sanitation systems do not receive direct subsidies and are financed through the capital market, and ultimately through user fees. However, Chile has an innovative system of means-tested subsidies that allows qualifying poor households to receive a subsidy administered by the municipalities to pay parts of their water and sanitation bills. Rural water systems receive a partial investment subsidy that is defined in the Ley del Subsidio al Agua Potable y Saneamiento. By law, the subsidy can cover 25-85 percent of a household's water and sewer bill up to 15 m³ per month. The client pays the rest of the bill. Beyond 15 m³, households are charged full price. The subsidy is meant to target only those households that are unable to buy water at a subsistence level and is based on willingness to pay. In 1998, about 13% of households benefited at a level of ~$10 per month. The total cost of the program in 1998 was US $36 million. Opponents argue this subsidy program can act as a regressive policy and actually hurt the poor because a false assumption is made that high consumption is positively correlated to high income. On the contrary, poor families do not have access to efficient methods of using water in cooking, cleaning, and washing.
Investment Since the sector was prepared for self-sufficiency, investment increased significantly from an annual average of about US$ 100m in the period 1965 to 1989 to an annual average of US$ 242m in the period 1990 to 1998, when the first company was privatized. According to SISS, since 1998 the annual investment ranges between US$ 151m (1999) and US$ 443m (2002). Total investment in 2006 was US$ 325m.
Read more about this topic: Water Supply And Sanitation In Chile
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