Universal Journal of Management Vol. 12(2), pp. 11 - 21
DOI: 10.13189/ujm.2024.120201
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Challenges and Strategies in Water Tariff Implementation: A Multi-Dimensional Analysis of Ecuador's Urban and Rural Sectors

Alfonso Arellano ^1,*, Luis Ramírez ¹, Gabriela Arias ², Nadia Benalcázar ^1
1 School of Civil Engineering, Faculty of Engineering, National University of Chimborazo, Ecuador
² School of Environmental Engineering, Faculty of Sciences, Escuela Superior Politécnica de Chimborazo, Ecuador

ABSTRACT

In Ecuador, potable water tariffs are set by Service Providers under the guidelines of the Water Regulation and Control Agency (ARCA), a critical component for ensuring sustainable water management. These tariffs consist of two components: 1) fixed tariffs are based on a basic monthly consumption which should at least cover the operational and maintenance costs (O&M) of the service; 2) variable tariff component is intended to recover the investment and fund repairs and expansions to increase geographic and demographic coverage and to improve water quality. This study analyzes whether basic consumption limits and the basic tariffs align with the population sizes and hydraulic flow rates of water supply systems, using mathematical equations governing their design. Linear regression analysis and the determination coefficient R^² are employed to assess the relationship between population sizes, hydraulic flow rates and tariff settings. A positive linear relationship is hypothesized, reflecting an expected correlation between population sizes, flow rates, and O&M costs. However, the study finds weak correlations, with the highest R^² being only 10.7%, suggesting that current tariff structures are inadequate for covering operational and maintenance costs. This insufficiency poses challenges to the sustainability of water services. Additionally, the analysis reveals that both small and large communities struggle with cost recovery due to billing practices that do not effectively address basic consumption limits, compounded by issues such as incomplete and delayed payments. These findings underscore the need for revised tariff structures and improved billing and collection strategies to ensure financial sustainability and equitable water service provision.

KEYWORDS
Potable Water, Tariffs Analysis, Sustainable Management

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Alfonso Arellano , Luis Ramírez , Gabriela Arias , Nadia Benalcázar , "Challenges and Strategies in Water Tariff Implementation: A Multi-Dimensional Analysis of Ecuador's Urban and Rural Sectors," Universal Journal of Management, Vol. 12, No. 2, pp. 11 - 21, 2024. DOI: 10.13189/ujm.2024.120201.

(b). APA Format:
Alfonso Arellano , Luis Ramírez , Gabriela Arias , Nadia Benalcázar (2024). Challenges and Strategies in Water Tariff Implementation: A Multi-Dimensional Analysis of Ecuador's Urban and Rural Sectors. Universal Journal of Management, 12(2), 11 - 21. DOI: 10.13189/ujm.2024.120201.