and research initiated a competition of ideas to reduce the costs of water supply together with the economic research institute rwi and 14 water utilities. it developed a set of criteria to assess strengths and weaknesses in the industry. participating utilities say that they reduced their operating costs by about 5 percent after two to three years. the professional associations dvgw and dwa have jointly established a voluntary benchmarking system, which keeps individual company data confidential. the associations consider the system as being highly successful. tariffs and cost recovery legal framework by law (kommunalabgabengesetze or betriebsgesetze der länder) tariffs must cover the full costs of water supply and sanitation, including capital replacement and the remuneration of equity. the various state laws do not foresee a review of the level of the efficiency of investments and operations as part of the tariff approval procedure. some states also levy a resource charge for groundwater abstractions which is passed on by utilities to the consumers. there is no such a charge for surface water abstraction, however. utilities also pay a wastewater discharge fee which depends on the degree of pollution of the discharged treated wastewater. the discharge fee is supposed to provide an incentive to treat water beyond what is legally required (abwasserabgabengesetz). it accounts for about 3 percent of total sanitation costs. tariff levels in 2004 water tariffs averaged 1.81 euro per cubic meter including vat, and sanitation tariffs averaged 2.14 euro per cubic meter. according to nus consulting water tariffs in germany (without sanitation) were the highest of 16 mainly oecd countries at the equivalent of us$2.25 per cubic meter, about on par with tariffs in denmark. however, according to a study commissioned by the german industry association bgw in 2006, the average household water bill was only 82 euro per year in germany, lower than in france or in england and wales, but higher than in italy. the study shows that subsidies are more prevalent in the three comparator countries and service levels are lower. taking into account these differences, the cost of supplying water at an equalized service level would be 84 euros in germany, 106 euro in both france and england/wales, and 74 euro in italy. the apparent discrepancy between higher unit tariffs and lower bills is due to the lower water consumption in germany. water tariffs have remained stable in real terms over the past ten years. comparison of annual water and sanitation bills per capita in four eu countries water tariff sewer tariff total germany 85 euro 111 euro 196 euro england and wales 95 euro 93 euro 188 euro france 85 euro 90 euro 175 euro italy 59 euro 40 euro 99 euro source: metropolitan consulting group: vergleich europäischer wasser- und abwasserpreise, 2006 concerning sanitation, unequalized tariffs are by far the highest in germany at 111 euro per year. equalized costs net of subsidies are, however, highest in england and wales with 138 euro, followed by france (122 euro), germany (119 euro) and italy (85 euro). metering metering is widespread in germany and almost universal for single family homes. however, many apartments do not have their own meter, so that households living in apartments where only the consumption of the entire house is metered have little financial incentive to conserve water. investments and financing in 2005 investments stood at 7.8 billion euros, including 5.5 billion euros for sanitation and 2.3 billion euros for water supply. financing is predominantly through debt and ultimately through user fees. commercial debt is issued directly by the municipalities in the form of municipal bonds (kommunalanleihen) or by utilities. the development bank kfw also provides long-term credit for up to 30 years (kommunalkredit) for municipal investments, including water supply and sanitation. according to the professional associations of the sector there is no investment backlog (investitionsstau).