Water Pricing Policy as Tool to Induce Efficiency in Water Resources Management

Marcos García-López, Borja Montano and Joaquín Melgarejo
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Marcos García-López: University Institute of Water and Environmental Sciences, University of Alicante, 03690 San Vicente del Raspeig, Spain
Borja Montano: University Institute of Water and Environmental Sciences, University of Alicante, 03690 San Vicente del Raspeig, Spain
Joaquín Melgarejo: University Institute of Water and Environmental Sciences, University of Alicante, 03690 San Vicente del Raspeig, Spain

IJERPH, 2020, vol. 17, issue 10, 1-19

Abstract: This research seeks to determine and analyze the reaction to an increase in the water invoice with the aim of introducing improvements in wastewater treatments. To this end, the purification situation is analyzed and the price elasticities of demand are obtained through Ordinary Minimum Squares. The results show that there are several small noncompliant treatment plants, as well as a complex interaction among consumption, price, and income. In many cases, the results offer small or significant differences without a clear pattern. However, it highlights the number of household members as it is strongly related to consumption and price and not considering it in the elaboration or modification of the water tariff would lead to inefficiencies. A reduction in revenue has also been found due to the strong consumer reaction, so it is necessary to assess in more depth what kind of price change would be most appropriate, as well as whether such measures would be best suited to address the problem.

Keywords: water pricing; household budget; household structure; price elasticity; public health; wastewater treatment (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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