Water Tariffs in Spain

Abstract

In the current context of climate change, water scarcity has become the center of an intense debate in recent years. Spain is a country affected by strong regional differences in terms of weather; thus, the quality and availability of water resources vary widely depending on the area, and the country is plagued by droughts and problems with water quality. Nevertheless, urban water prices in Spain are among the lowest in the European Union. Moreover, it is a federal country where subcentral governments (regional and local) are autonomous entities with different responsibilities in the design of water policies. The extremely atomized local panorama and the strong power of the regional governments have led to a highly complex system with a wide range of water price levels and structures. Since the heterogeneity is so great, this article focuses on the tariffs related to the water supply service in the 15 largest Spanish cities. In general, urban water tariffs commonly distinguish between residential and non-residential users. Additionally, there are usually specific tariffs for different customer categories within both residential and non-residential users, which are not always justified in terms of the equity principle. It is important to note that in most cities the eligibility criteria for these special tariffs usually add more complexity to the tariff system and adversely affect horizontal equity. All these factors contribute to the great complexity of Spain’s water-pricing map. The heterogeneous tariff system found in most Spanish cities runs counter to equity principles and can send the wrong signal to users about water scarcity, thereby hindering compliance with the resource sustainability objective. Thus, most Spanish cities require a simplification of the tariff system.

Are Economic Tools Useful to Manage Residential Water Demand? A Review of Old Issues and Emerging Topics

“…Since water pricing is aimed at different objectives [79,80], water tariffs exhibit a broad range of structures, from flat rates and fixed tariffs, to different types of variable tariffs that may be levied as increasing, linear, or decreasing block rates [80]. Sometimes, water tariffs are adapted to household features, such as in the case of allocation-based rates and special tariffs [80][81][82]. As expected, fixed tariffs where charges are not related to water usage are associated with greater water consumption compared to volumetric tariffs [79,80].…”

A Panel Data Estimation of Domestic Water Demand with IRT Tariff Structure: The Case of the City of Valencia (Spain)

“…A uniform tariff is very unusual (only 5.2% of the population has a uniform rate), and IRT is practically non-existent [47]. However, given that drinking water supply is a municipal responsibility in Spain, there is a great diversity of price structures [48]. It could be said that there is a different water price for each of the Spanish municipalities.…”

“…Finally, some studies that have tried to determine the causes of price differences in Spain concluded that climatological (relative scarcity) and political factors influence price diversity [49,121]. The extremely atomised local panorama and the strong power of regional governments have led to a highly complex system with a wide range of water price levels and structures [48]. The climatic differences among Spanish geographical areas generate different price elasticity values.…”

Heterogeneity in Domestic Water Demand: An Application of Multilevel Analysis to the City of Valencia (Spain)

“…Nonetheless, as stated above, a relevant feature of the city of Valencia is the domestic water pricing. Unlike most cities that apply the IBT tariffs [58][59][60][61], in the city of Valencia, the tariff structure is based on an increasing rate tariff (IRT) [also known as increasing average price tariffs (IAPT)], where the variable charge is obtained by multiplying household consumption by a price that varies depending on consumption [58].…”

“…Thus, the bill faced by consumers has two important characteristics: on the one hand, the fixed part is large in relation to the variable part (fixed charges account for about 60% of the total bill), and on the other hand, the variable part is not considered progressive. As the ratio of the last block price to the first block price registers a value 1.1; therefore, the penalty applied is low when consumption is registered in the last block [61].…”