Implications of Water Tariff Structures on Water Demand in Santa Cruz Island (Galapagos Archipelago)

Maria F. Reyes
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Maria F. Reyes: Environmental Engineering and Water Technology Department, IHE Delft (Institute for Water Education), Netherlands

International Journal of Economics and Financial Research, 2021, vol. 7, issue 3, 132-142

Abstract: The island of Santa Cruz, located in the Galápagos Archipelago has experienced a significant increase in tourism with consequent growth of the local population over the past two decades. The rapid increase in the number of hotels and restaurants raised pressure on the water demand needed to satisfy the customers’ needs. The municipality of Santa Cruz has not been capable of coping with current expansion rates in order to provide good quality water services. Financial constraints, limited personnel, and tariff structures are the main reasons that restrict the capacity of the Department of Potable Water and Sanitation (DPWS) to manage the water supply system. There are two main settlements on the island are Puerto Ayora and its suburb, Bellavista, with a total population of approximately 14,500 and independent water supply systems. Puerto Ayora has a fixed-priced tariff per month, for categories established by the municipality. On the other hand, Bellavista has a metered system, with fixed consumer costs Yet, approximately 32% of water meters are faulty. Consequently, water demand in these two settlements varies significantly, which is likely influenced by the difference in tariff structures. This manuscript assesses the difference in tariffs between the two settlements. Furthermore, the impacts on revenues due to faulty meters (Bellavista) and fixed tariffs (Puerto Ayora) are quantified. In addition, several scenarios have been developed and analyzed in order to examine the benefits. Finally, the information regarding overdue bills and willingness to pay by the different categories of users has been examined. Results show that the revenues from water supply vary extensively between the two settlements. Due to the fixed tariffs in Puerto Ayora, the estimated cost per cubic meter of water varies depending on the specific category and estimated quantities of water used. In the case of Bellavista, water meters should be managed better and have regular maintenance. The high percentage of faulty meters gives an extra deficit to the municipality.

Keywords: Water tariff; Water demand: Water supply; Galápagos Islands; Tropical islands (search for similar items in EconPapers)
Date: 2021
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