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Water Prices in CEE and CIS Countries. Volume II: Case Studies
The level of service in Poznan, for both water and wastewater, is high in relation to
many other cities in Poland and in the CEE. There is a corresponding high tariff level.
The tariff level is uniform for different consumer groups. Thus tariff increases due to a
policy to end cross-subsidisation by industry belongs to the past.
The (ongoing and planned) level of investments in water and wastewater services in the
city of Poznan is high. This reflects the need to renovate a system which (in parts) is
quite old, the need to comply with EU requirements and a desire to expand the current high
level of services to gminas surrounding Poznan. Acknowledging the high level of service
currently found in Poznan, we have focused on willingness to pay to avoid deterioration in
future service levels and have compared that with willingness to pay to have improvements
within water supply. We have assessed, but not quantified by applying the stated
preference methodology, willingness to pay for improved wastewater treatment (to comply
with EU legislation), and we have not assessed willingness to pay more in order to expand
services in the surrounding gminas. Both of these are legitimate policy objectives and our
choice solely reflects the desire to test different aspects of willingness to pay in
different case study cities.
Average income levels in Poznan are higher than average for Poland. In general
affordability does not seem to be a major issue in Poznan (within reasonable investment
levels and tariff increases). However, there are vulnerable groups for whom the issue of
affordability is likely to need consideration. There are opportunities to address the
issue of affordability for low-income groups through the tariff structure and through
tariff collection policies etc. However, these have not been analysed or elaborated on in
this working paper.
Consumers perceive the services of PWIK (cold water supply) less unfavourable than for
most other utilities. However, there is ample room for improvement. 40% of consumers feel
that the cold water services and wastewater services are not worth the current price.
Furthermore - and in contrast to the factual situation - most consumers believe that tap
water is not drinkable. This may reflect a lack of information about actual water quality,
it may reflect habits and it may reflect that many consumers are unsatisfied with taste,
smell and colour (in that order). A limited number of samples exceed the standards for
iron, manganese, turbidity and colour (in that order) thus giving (limited) backing to
consumer complaints about taste, smell and colour.
The willingness to pay analyses show a significant willingness to pay to avoid
deterioration in service levels. The WTP is higher for young people than for old, higher
for women than for men and (not surprisingly) lower for persons from lower income
households than for persons from average and higher income households.
Interestingly, almost half of all water consumers believe that the appropriate strategy
for PWiK in the future is to increase service levels and tariffs, 40% believe that the
appropriate strategy is to maintain current service levels and tariffs, while only 10% are
undecided or prefer lower service levels and tariffs. This situation may explain why the
question of water tariffs in Poznan has not emerged as a significant political issue until
now.
However, in relation to potential future tariff increases it is worth noting that the
analyses indicate that consumers perceive their level of information about water and
wastewater services to be low. This increases the risk that sudden and significant water
price increases will be seen as arrogant and not justifiable. To address this issue the
existing procedures and practice for tariff-setting could be complemented by a more
participatory process during which the public understanding of the intention and the need
of changes should be targeted.
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