Providing safely managed drinking water services to the approximately two billion people lacking access is a global challenge, particularly acute in rural Africa where a substantial portion of water points are non-functional. This dysfunctionality renders significant capital investments unproductive. Hand and foot pumps, prevalent in Africa, often experience extended periods of breakdown. Despite decades of investment in community-based management, maintaining rural water supply infrastructure has proven largely unsatisfactory. Evidence suggests that professional service delivery models achieve significantly higher operational performance, although they often require subsidies to cover operating costs. User payments are a significant source of WASH financing, yet the optimal pricing strategies to balance affordability and cost recovery remain debated. Given the projected growth in maintenance costs exceeding capital investments by 2030, understanding effective revenue collection is crucial for achieving SDG 6.1. Volumetric pricing, common in urban areas to enhance revenue and encourage efficient use, is increasingly adopted in rural Africa. Mali recognizes both flat fees and volume-based payments, but the effectiveness of volumetric pricing for handpumps is unclear. This study examines the revenue generation potential of different payment modalities within the context of a professional service delivery model implemented in the Sikasso region of Southern Mali, characterized by distinct wet and dry seasons and temperature variations.

Existing literature highlights the challenges in maintaining rural water infrastructure in sub-Saharan Africa, emphasizing the shortcomings of community-based management and the potential of professional service delivery models for improved performance. Studies show that user payments are a major source of WASH financing, but there's ongoing debate about effective pricing strategies that balance cost recovery with affordability. Volumetric pricing is common in urban areas, but its applicability and effectiveness in rural settings remain empirically unclear. Several studies have examined the impact of payment modalities on water use behavior and cost recovery, showing varying results depending on local context and infrastructure. This study builds upon this literature by providing empirical evidence from a large-scale implementation of a professional service delivery model in rural Mali, comparing the effectiveness of volumetric versus flat fee payment approaches.

This study uses data from UDUMA Mali, a private company providing reliable rural water services in 30 municipalities. Data encompass 4413 months of records from November 2019 to April 2023 across 177 handpumps equipped with water meters. The data include monthly meter readings, payments, and operational costs. Two payment modalities were studied: volumetric "pay-as-you-fetch" (PAYF) and monthly flat fees. Data cleaning involved removing faulty meter readings; the final dataset included 4413 monthly observations (1885 volumetric, 2528 flat fee). The analysis focused on four outcomes: daily water use, monthly revenue, monthly working ratio (share of operational costs covered by revenue), and collection efficiency. Fixed-effects regression models were used to estimate the effects of payment modality, controlling for climatic conditions (temperature and rainfall). Robust standard errors were clustered at the waterpoint level to account for autocorrelation.

The study reveals several key findings. First, daily water use more than doubled under flat fees (mean 1.74 m³) compared to volumetric payments (mean 0.84 m³). This increase aligns with the shift in payment modalities and shows a seasonal pattern, with higher usage during the hot, dry season. Regression analysis, controlling for climate, shows flat fees are associated with an additional 900 liters of daily water use per waterpoint, and a 1°C temperature increase leads to 180 liters more daily water abstraction. Second, flat fees significantly improve revenue collection efficiency (mean 54%) compared to volumetric payments (mean 29%). While flat fees generally outperform volumetric payments, spatial variation in collection efficiency exists across municipalities. Over time, flat fee collection efficiency initially showed stability but then declined after the onset of the rainy season in 2022. Regression analysis indicates that flat fees are associated with better payment collection than volumetric payments. Third, monthly revenue per waterpoint under flat fees was almost four times higher ($12.85) than with volumetric payments ($3.42). The monthly revenue generated through flat fees since the rainy season of 2022 equals the revenue registered under the volumetric modality during its peak period despite a 50% reduction in paying water points. Regression analysis demonstrates that flat fees are significantly associated with increased monthly revenue, and a 1°C temperature increase is linked to an extra $0.82 in revenue per waterpoint. Fourth, the average working ratio (cost recovery) improved under flat fees (53.5%) compared to volumetric payments (14%), resulting in a 39% improvement in the share of local operational costs covered through local revenue when controlling for temperature and rainfall. Under the volumetric approach, a monthly subsidy exceeding $20 was required, while this dropped to under $12 with flat fees. The data suggests a user preference for flat fees, though the effectiveness varies spatially.

The findings highlight the significant impact of payment modality on water use, revenue generation, and cost recovery. The observed increase in water consumption under flat fees, coupled with improved revenue collection, suggests that volumetric pricing may be socially unacceptable for reliable rural water services. While flat fees offer substantial improvements, they are not a universally applicable solution, as collection efficiency varies across municipalities. This variation underscores the need to consider local context and potential factors influencing payment behavior. The reduction in required subsidies with flat fees suggests that this approach can contribute to more financially sustainable rural water systems. The study also emphasizes the role of professional service delivery models in achieving both reliable service provision and providing valuable data for informed policymaking.

This study demonstrates the superiority of monthly flat fees over volumetric pricing for handpump water systems in rural Mali in terms of revenue generation, cost recovery and water usage. While subsidies are still necessary, they are significantly reduced with flat fees. The importance of professional service delivery models in collecting such data and ensuring reliable service provision is also highlighted. Future research should investigate affordability, explore the reasons behind declining collection efficiency, and investigate the impact of payment modalities on water demand at the household level using methods such as water user diaries. The findings provide valuable insights for policymakers and service providers in designing effective and sustainable rural water service strategies.

The study is based on observational data from a specific context, limiting the generalizability of the findings. The study period and focus on handpumps may influence the results; other water infrastructure types might yield different outcomes. The gradual, non-random introduction of the flat-fee system could influence the causal interpretation of the results. The study doesn't include a detailed affordability analysis. The declining trend in collection efficiency, starting after the rainy season of 2022, requires further investigation to determine the underlying causes.