Opportunity Costs of Ensuring Sustainability in Urban Water Services

Francisco Sáez-Fernández, Francisco González-Gómez and Andres Picazo-Tadeo

International Journal of Water Resources Development, 2011, vol. 27, issue 4, 693-708

Abstract: This paper assesses technical performance in the water industry in the Southern European region of Andalusia, while accounting for sustainability in the management of water. This allows the opportunity cost of producing sustainability to be evaluated. Given the low cost of raw water in Spain in relation to the estimated opportunity cost of saving this natural resource, wasting water becomes a profitable strategy for utility managers from a private perspective. However, this managerial strategy has a huge social cost in an area of Europe where the sustainable management of water is a pressing need. The conclusion is that environmental policy aimed at discouraging this wasteful behaviour is urgently needed. For this reason, a suitable mix of environmental taxes on water abstraction and institutional reforms is proposed.

Date: 2011
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DOI: 10.1080/07900627.2010.548316

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