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This paper outlines a framework that will facilitate the assessment of the financial sustainability of proposed improvements in water and sanitation facilities. Financially sustainable services are those in which the revenues generated from the service users exceed the cost of providing the service. This analytical framework identifies the levels or amounts of the service that can be financially self-supporting. It will also reveal the extent of any subsidy that would be required for levels of the service at which the costs to provide the service exceed the revenues that can be generated. The framework that is used is the conventional supply and demand model of microeconomic theory. Three case studies illustrate how data from contingent valuation surveys can be readily brought into this framework.


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