This publication is divided in two sections: water pricing policy and structures, and promotion of private investment in the water supply sector.

The first section deals with the use of water pricing as a tool for effective demand management. In the current era of rapidly increasing water demand and growing scarcities, it is necessary to manage demand in order to conserve resources. Water pricing can play an important role in management of urban and rural water supply systems. Realistic water prices, when properly introduced and administered, can encourage efficient use of water, meet operational and maintenance costs, recover capital investments, generate funds for extension of services to other areas, and protect the environment by reducing the quantity of wastewater.

The second section explores options for mobilizing funding for construction of water supply and sanitation infrastructure. Insufficient funding has been identified as the main constraint to development of the required infrastructure in most countries in Asia and the Pacific. Significant additional investments, several times larger than the funding devoted at present, are required to provide safe water supply and adequate sanitation at accelerated rates to meet the rapidly increasing demands of growing populations and increasing economic activity. However, any sharp increase over the current level of investment by central and provincial governments and city administrations appears unlikely in most countries in the near future. Promotion of private sector investment could attract additional funding for upgrading water supply and sanitation services, and expanding them to serve additional areas and customers.