Water pricing and full cost recovery of water services: economic incentive or instrument of public finance?

Water Policy ◽  
2007 ◽  
Vol 9 (6) ◽  
pp. 591-613 ◽  
Author(s):  
Antonio Massarutto
Keyword(s):  
Water Resources ◽  
Economic Incentive ◽  
Water Systems ◽  
Water Pricing ◽  
Cost Recovery ◽  
Infrastructure Development ◽  
Full Cost ◽  
Scarce Water ◽  
Financing Infrastructure ◽  
Full Cost Recovery

Neoclassical economists have advocated the use of pricing instruments as a fundamental tool for achieving sustainability of water systems and an efficient allocation of water resources. This idea has been accepted in worldwide agreed definitions of sustainability, where “full-cost recovery” is considered as a basic requirement. In this paper, we argue that water pricing (aiming at allocative objectives) and cost recovery can often be at odds, while prevalence of one or the other objective also depends on whether the main issue at stake is financing infrastructure development and maintenance, or rather allocating scarce water resources. Therefore, the two issues should be dealt with separately and require different approaches to pricing.

Book Reviews

2015 ◽  
Vol 53 (4) ◽  
pp. 1040-1043
Keyword(s):  
Environmental Economics ◽  
Socioeconomic Development ◽  
Water Pricing ◽  
Cost Recovery ◽  
Domestic Water ◽  
Full Cost ◽  
Municipal Water ◽  
The University ◽  
The Impact ◽  
Full Cost Recovery

Peter Debaere of Darden Business School, University of Virginia reviews “Water Pricing Experiences and Innovations”, by Ariel Dinar, Victor Pochat, and Jose Albiac-Murillo. The Econlit abstract of this book begins: “Twenty-two papers examine water pricing experiences in various countries from 2000 to 2015. Papers discuss water pricing in Australia—unbundled politics, accounting, and water pricing; water pricing in Brazil—successes, failures, and new approaches; water pricing in Canada—recent developments; water pricing in Chile—decentralization and market reforms; water pricing in China— the impact of socioeconomic development; water pricing in Colombia—the transition from bankruptcy to full-cost recovery; water pricing in France—moving toward more incentives to conserve water; water pricing experiences in India—emerging issues; water pricing in Israel—various waters, various neighbors; water pricing in Italy—beyond full-cost recovery; water pricing in Mexico—pricing structures and implications; water pricing in the Netherlands; New Zealand water pricing; water pricing—the case of South Africa; water pricing in Spain—following the footsteps of somber climate change projections; introducing new mechanisms into water pricing reforms in China; how to integrate social objectives into water pricing; sustainable water rate design at the Western Municipal Water District—the art of revenue recovery, water use efficiency, and customer equity; pricing urban water services in the developing world—the case of Guayaquil, Ecuador; the price for domestic water supply—an innovative method developed for the Tucano aquifer in the state of Bahia, Brazil; pricing for reclaimed water in Valencia, Spain—externalities and cost recovery; and pricing municipal water and wastewater services in developing countries—whether utilities are making progress toward sustainability. Dinar is a professor of environmental economics and policy with the School of Public Policy at the University of California, Riverside. Pochat is a professor at the National University of Litoral. Albiac-Murillo is a researcher at the Agrifood Research and Technology Center and a professor at the University of Zaragoza.”

Urban domestic water pricing in India and China

Water Policy ◽  
2016 ◽  
Vol 18 (S1) ◽  
pp. 68-82 ◽  
Author(s):  
Frederick Lee ◽  
Veena Aggarwal ◽  
James Nickum
Keyword(s):  
Water Resources ◽  
Water Pricing ◽  
Cost Recovery ◽  
User Fees ◽  
Domestic Water ◽  
Municipal Governments ◽  
Administrative Structures ◽  
India And China ◽  
Water Tariffs

Despite significant differences in political and administrative structures, recent reforms in urban domestic water tariff regimes in India and China have had similar trajectories with important but sometimes nuanced differences. In both countries, there has been a devolution of operational authority to municipal governments and acceptance of greater reliance on cost recovery through user fees. Reflecting this, there is considerable variation within each country in water tariffs, with cities in more water-short areas charging more than those with relatively abundant and accessible water resources. At the same time, authority over tariff setting remains largely outside the domain of the water agencies, and is highly political. One reflection of this is the infrequent adjustment of tariffs in both countries.

Linking Full-Cost Recovery and Sustainability

2019 ◽  
pp. 57-61
Author(s):  
John E. Cromwell ◽  
Jeffrey L. Jordan
Keyword(s):  
Cost Recovery ◽  
Full Cost ◽  
Full Cost Recovery

scholarly journals Una nota sobre la recuperación de costes de los servicios del agua en la cuenca del Gállego

2011 ◽  
Vol 7 (13) ◽  
pp. 49 ◽  
Author(s):  
Luis Pérez y Pérez ◽  
Jesús Barreiro Hurlé
Keyword(s):  
Water Management ◽  
Low Cost ◽  
Public Capital ◽  
Cost Recovery ◽  
Water Services ◽  
The Public ◽  
Full Cost ◽  
Sustainable Water Use ◽  
Full Cost Recovery

Up to date, water management in Spain has been focused on supply approaches, with the result of providing consumers with this resource at a low price. Developments in the institutional framework regulating water management in the European context (mainly the implementation of the Water Framework Directive) have shifted this approach in order to promote sustainable water use. To achieve this objective, tariff policy must now take into account the water services cost-recovery principle for its different uses. Within this context, this paper estimates the public capital stock related to water supply and assesses the existing level of cost-recovery related to that stock. The methodology used, compares the tax level needed for full-cost recovery with actual revenues from different water-related taxes. The case study area is Gallego River basin in Aragon, and results show the low cost- recovery level for most water services.

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