Using Performance-Based Contracts to Reduce Non-Revenue Water

Non-revenue water (NRW) management can deliver significant financial and economic benefits, and to a large extent, NRW programs can be self-financing—rapid revenue gains from commercial loss reduction, for example, can supply the OPEX and CAPEX funds needed to reduce the NRW.

But these benefits often remain unrealized, because water service providers face many political, financial and technical hurdles. NRW PBCs (performance-based contracts) provide an opportunity to invite a third party to overcome some of these hurdles, with the incentive to do so as rapidly and cost-effectively as possible.

This paper discusses the issues that need to be taken into consideration in designing the NRW program and PBC contract so that it delivers the best value for the service provider.