The Political Economy of Water Abstraction Charges

Stephen Merrett

Review of Political Economy, 1999, vol. 11, issue 4, 431-442

Abstract: An important economic instrument in the management of a river catchment's water resources is the charges made by government for the abstraction of water from ground and surface sources. Abstraction charges are a form of rent. However, the classical theory of differential rent has limited application to abstraction prices because that theory's assumption of competition in the supply of the natural resource does not hold in this case. Here, the property rights of individual households and of institutions to draw water are assigned by a state monopoly. In order to understand the specific and contingent practices of government in different countries, a taxonomy of charge-setting principles is proposed. This paper sets out six principal fields of action for sustainable water resource planning and, in that context, recommends full incentive charging as the basis of catchment policy.

Date: 1999
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DOI: 10.1080/095382599106904

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