Drivers and challenges to water tariff reform in Saudi Arabia

In 2015, increases in the domestic water tariff in Saudi Arabia were met with significant opposition. Although the increases were needed to address the technical and financial sustainability of the service in the context of extreme scarcity and high costs, insufficient effort was made to explain the changes and prepare the public. This paper examines the trade-offs surrounding the design of a domestic water tariff, based on economic theory and global experience, and sets out the competing factors Saudi Arabia should consider when designing a new tariff structure to provide long term public acceptability while ensuring the service remains sustainable.