An Exercise on the Optimal Use of Groundwater Resources

Laura Castellucci () and Alessio D’amato
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Alessio D’amato: University of Rome ''Tor Vergata''
Authors registered in the RePEc Author Service: Alessio D'Amato ()

Rivista Internazionale di Scienze Sociali, 2006, vol. 114, issue 4, 544-560

Abstract: According to the EU water framework directive 2000/60, water tariffs should be based on the full cost recovery principle, including scarcity and external effects. To disregard these two aspects is not only conceptually misleading, as we try to show, but also leads to a wrong, distorted tariff. Our attempt to measure such distortion with respect to the italian case shows, for example, that water tariffs should be up to three times higher than the actual ones. That is to say, a significant correction in water prices is needed to achieve efficiency.

Keywords: externality; non-renewable resources; scarcity; tariff correction (search for similar items in EconPapers)
JEL-codes: D6 Q3 Q58 (search for similar items in EconPapers)
Date: 2006
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