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# C. Constraints to Implementing Efficiency Prices

75. The previous Section examined eight of the most common problems of efficiency price determination. The degree of effort it is appropriate to spend on overcoming such problems in the estimation of efficiency prices depends in part on the ease with which such prices can be implemented in a particular sector. If some sectors have devoted less attention than others to the calculation of efficiency prices (as we found in the previous Section), the reason may be that characteristics peculiar to the sector prevent their practical application. This Section discusses the major constraints to efficiency pricing and how they have been handled in the vario ts sectors.

# Metering Problems

76. An obvious implemntation constraint in sectors such as irrigation and roads is the difficulty of measuring consumptiou. Volumtric metering has occasionally been advocated in Bank irrigation projects (it was used in two of the 14 cases reviewed), but has generally been considered infeasible or uneconomic. Cost recovery through benefit taxes has somtimes been designed to approximate the volumetric charge that would have been incurred, but much of the efficiency effect is lost since the consumer is not able to directly affect his costs by varying usage. In the case of highways, tolls **have** been rejected except under unusual circumstances because of their administrative cost and the inconvenience to consumers. Congestion charges have been advocated in theory, but none of the projects reviewed us-d them.

77. Less obvious cases of metering problema exist in the power, natural gas and water sectors. For small consumers with few appliances or without indoor plumbing, the scope for wastage may be so small that installing and reading mters is not cost-effective. In these sectors metering studies have been carried out to determine practical cut-off levels and consumption surrogates to be used for billing. No references to similar studies were found in the irrigation or roads SARs, although there has been research on the cost of highway tolls. In the roads sector, other methods for cost recovery exist which correlate reasonably well with usage; for example, fuel taxes (although these do not distinguish between congested and underutilized roads). Parking meters and zonal access charges have been introduced successfully in a few developing countries. In the irrigation sector, experience with and without volumetric metering should be reviewed to assess its cost-effectiveness in developing countries. In addition, other instruments such as transferable water rights should be explored. The widespread experience with wastage of irrigation water and the expense of drainage systems necessitated by overwatering justifies a renewed search for means of signaling marginal resource costs to consumers.

78. A different type of metering problem arises in the health sector. Certain types of services are non-exclusive, with no direct link between provider and beneficiary. Examples include disease control through draining swamps, pest eradication programs, and health education through radio or billboard advertising. Mass literacy campaigns, in the education sector, may also be non-exclusive. Benefit taxes may be the only practical alternative for cost recovery in such cases.