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__NOTOC__<small-title />[[Image:financing streams icon.png|right|100px80px|]]
The main financing sources to recover the [[Costs of WASH Service Delivery - Introduction | costs of water, sanitation and hygiene service delivery]] are (a combination of) [[Taxes | taxes]] levied by national or regional governments, [[Transfers | transfers]] made by development partners , and [[Tariffs | tariffs]] or own contributions paid by users of a services service (see figure 1). These financing sources in the water and sanitation sector are also known as the ''three T''s (e.g. taxes, transfers and tariffs).
'''[[TariffsTransfers]]''' are refer to funds contributed by users of W waterfrom international donors and charitable foundations (including NGOs, sanitation and hygiene services for obtaining the service decentralized cooperation or local civil society organizations) that typically come from other countries ([[#GLAAS|GLAAS]], 2012). Users generally make payments to service providers for getting access to These funds can be contributed in the service and for using the serviceform of grants, concessionary loans (i. When the service is self-provided (e.g. when loans that include a household builds and operates its own household latrine), the equity invested by the household (''grant'' element in the form of cash, material a subsidized interest rate or time, sometimes referred to as “sweat equity”a grace period) would also fall under tariffsor guarantees.
'''[[TaxesTariffs]]''' refer to are funds originating from domestic taxes that are channelled to the sector via transfers from all levels contributed by users of government; including nationalwater, regional sanitation and local hygiene services for obtaining the service ([[#GLAAS|GLAAS]], 2012). Such funds would typically be provided as subsidies, Users generally make payments to service providers for getting access to the service and for capital investment or operationsusing the service. “Hidden” forms of subsidies may include tax rebatesWhen the service is self-provided, soft loans (ie.eg. loans at when a subsidized interest rate) household builds and operates its own household latrine, or subsidized when households try to improve the services (they receive, e.g. subsidized electricityexpenses with water purification devices, the equity invested by the household (in the form of cash, material or time, sometimes referred to as '''sweat equity''')would also fall under tariffs.
'''[[Taxes]]''' refer to funds originating from domestic taxes that are channelled to the sector via transfers from all levels of government, including national, regional and local ([[#GLAAS|GLAAS]], 2012). Such funds would typically be provided as subsidies for capital investment or operations. ''Hidden'' forms of subsidies may include tax rebates, soft loans, e.g. loans at a subsidized interest rate, or subsidized services, e.g. subsidized electricity. ===Examples==='''Financing flows''' <br>The way in which the main financing streams (, e.g. taxes, transfers and tariffs) , typically circulate in the water and sanitation sector is depicted in figure 2. The main actors involved are the water, sanitation and hygiene service providers, households and domestic governments , and development partners.
The dark blue boxes show the financing sources and the light blue boxes show the financing channels for public funding (note that the central government or its agencies may play the role of both financing source and financing channel at the same time) (GLAAS, 2012).
What is missing in the overview of figure 2 (see above) are transfers from donors other than governments , such as charitable foundations (, including NGOs, decentralized cooperation or local civil society organizations , or individuals) to individuals, households, service providers and different levels of governmentsgovernment.
====Financing sources and costs of water and sanitation service delivery====
IRC International Water and Sanitation Centre presented a generalisation (Pezon et.al, 2010, page 7) of how the [[Costs of WASH Service Delivery - Introduction | costs of water and sanitation service delivery]] are covered at present recovered by the main sources of financing.
{|border="1" cellspacing="0" cellpadding="3"
|-
|<font color=limegreen>'''Tariffs'''</font> <br><font color=dodgerblue>'''Transfers'''</font>
|<font color=limegreen>'''Tariffs'''</font>
|Not applicable
|<font color=dodgerblue>'''Transfers'''</font>
|<font color=limegreen>'''Tariffs'''</font> <br><font color=dodgerblue>'''Transfers'''</font><br><font color=orange>'''Taxes'''</font>
|-
|Existing system
|Not applicable
|<font color=limegreen>'''Tariffs'''</font>
|<font color=limegreen>'''Tariffs'''</font>
|<font color=dodgerblue>'''Transfers'''</font>
|<font color=limegreen>'''Tariffs'''</font>
|Not applicable
|<font color=orange>'''Taxes'''</font>
|<font color=dodgerblue>'''Transfers'''</font>
|<font color=limegreen>'''Tariffs'''</font>
|}
As shown in table 1 (see above), tariffs are mostly used to cover [[Operational and Minor Maintenance Expenditure (OpEx)|operations and minor maintenance expenditure]] and the [[Cost of Capital (CoC)|cost of capital]]. Transfers are mostly focused on [[Capital Expenditure (CapEx)|capital expenditure]] and [[Expenditure Indirect Support (ExpIDS)|indirect support]]. Taxes are used to cover [[Expenditure Direct Support (ExpDS)|direct support]]. [[Capital Maintenance Expenditure (CapManEx)|Capital maintenance]] is underfundedas its expected to be covered by tariffs, but in reality it is not happening and premature failure of infrastructure is all too often.
====Financing sources in Europe====
In 2012 , the Ecologic Institute undertook an analysis of financing streams in the water sector in eight European countries. Figure 2 3 shows the percentage of the tariffs, taxes and transfers as in the overall budget (DANVA et.al, 2012). '''Figure 3. Financing sources (e.g. tariffs, taxes and transfers) to water sector in 8 European countries in percentage (%)'''[[Image:financing sources fg 3.jpg|thumb|none|500px|Source: DANVA et.al, 2012]]
===Links===* [http://www.ircwash.org/ IRC International Water and Sanitation Centre ] is a knowledge broker, innovator and catalyst of change within the water, sanitation and hygiene (WASH) sector working internationally and in selected focus countries and regions. IRC seeks to extend WASH services to the less privileged, while ensuring that services are based on the sustainable use of water resources, are appropriately managed, and are better governed. IRC works in partnership with governments, the public and private sector, Dutch and international organisations, UN institutions, development banks and non-governmental networks and organisations. For more information see : [http://www.ircircwash.nl and www.irc.nlorg/resources/financing-and-cost-recovery Financing and Cost Recovery]
<div id="GLAAS">'''GLAAS'''</div>