Critical factors for achieving multiple goals with water tariff systems: Combining limited data sources and expert testimony

Abstract

[1] Price instruments are well-known policy handles to influence effectively residential water demand. Prices used to be set by water authorities in such a way that the principle of cost coverage was respected; they acted as prominent instruments in residential water policies in the past decades. More recently, however, price instruments are increasingly used to meet simultaneously financial, environmental, and social goals. This paper addresses four conditions for an appropriate tariff system for residential water use which are often found in the recent literature on the economics of water use. The paper analyzes the importance of background factors (e.g., low water availability) of these four principles as well as the extent to which actual tariff systems are employed in five mutually contrasting cities (Amsterdam, Athens, London, Seville, and Tel Aviv). Metaanalytic techniques, in particular, rough set analysis stemming from artificial intelligence, are applied to identify the common underlying relations between background factors and success of achieving multiple goals in these five urban case studies. The paper concludes with policy recommendations.

Estimating the Determinants of Residential Water Demand in Italy

“…As such, water consumption decreases when a tariff growth is recorded. Thus, according to the literature, tariffs are frequently used as a tool for improving water savings [63]. The implementation of efficient water-pricing practices that promote equity, efficiency and sustainability in the water sector is probably the simplest conceptual instrument, but perhaps the most politically difficult to implement [64].…”

Optimal Water Resource Allocation in Arid and Semi-Arid Areas

“…From the institutional point of view, pricing or marketing is one of the instruments used to allocate water resources (Fisher et al 2002;Haddad 2000;Zylicz 2003), while tariffs form a complicated sub-system to be further optimised (Molden and Sakthivadivel 1999;Dalhuisen and Nijkamp 2002). The requirements for (and economics of) water distribution are much studied.…”

Welfare and Distribution Effects of Water Pricing Policies

“…Water demand is inelastic and elasticities are rather low but within the ranges mentioned in many other studies reporting price elasticities of demand ranging between -0.05 and -0.75 and income elasticities ranging between 0.05 and 0.50 with a few studies reporting elasticities exceeding 1 or even 2 (Dalhuisen and Nijkamp, 2001;Arbués et al, 2003).…”