Water pricing

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Water pricing is a term that covers various processes to assign a price to water. These processes differ greatly under different circumstances.

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Agricultural water pricing

One may realize that the whole problem in agricultural water consumption can be hardly attributed to the low price of agricultural water and raising agricultural water price would never be effective for reducing water consumption unless price adjustment accompanies developing necessary infrastructures. Unlike the views that advocate raising water prices, there are two distinct views: The first declares that agricultural water should be free of charge to the farmers because it returns to the hydrological cycle. The second view stipulates that instead of raising water prices in agriculture sector, the cost of water supply for agriculture should be reduced by new technologies. It is advised that before adjusting agricultural water price, institutional reforms are required based on the experiences of other countries and establishing local water distribution cooperatives. [1]

Effective and efficient water pricing

Key to effective and efficient water pricing is a systematic process to understand: (i) the value of water in alternative uses; (ii) the private and external costs of supplying water services; and (iii) the multiple options to determine an appropriate water tariff. Within the four dimensions of water pricing (uniform versus variable tariff and flat charge versus volumetric pricing), there is an almost infinite number of possible pricing combinations. Within this choice set, the preferred water tariff depends on multiple factors including: the goals of water pricing; the capacity of a water services supplier to allocate its costs, to price water, and to collect revenues from its customers; the price responsiveness of water consumers; and what is considered to be a fair or just water tariff. [2]

Bottled water

Prices for bottled water are set in the market, but must be seen not as much as a price of water, than the price of the convenience, bottle and transportation. It is comparable to other bottled cheap beverages (soda, beer, ...). Retail prices vary widely between countries, brands, bottle sizes (0.33 liter to 20 liters) and place of sale (supermarket, fair, restaurant etc.). They range from US$0.05 to US$6 per liter, equivalent to US$50 to US$6,000 per cubic meter.

Tanker trucks

Prices for water sold by tanker trucks in bulk, which is common in cities of some developing countries for households without access to piped water supply, are set in the market. Prices for trucked water vary between about US$1 and US$6 per cubic meter.

Utility tariffs

Prices for piped water supply provided by utilities, be they publicly or privately managed, are determined administratively (see water tariffs). They vary from US$0.01 to almost US$8 per cubic meter (including sewer tariffs).

Portland 2.17 gallons cost $0.01 [3]

Irrigation

Prices for irrigation water that is being provided by a public agency are also typically determined administratively, usually using a flat rate, since metering is not common in agriculture in most countries of the world.

The following pricing systems exist for irrigation: [4]

Tariffs can be paid in the form of labor, which holds mainly in communal types of management in traditional irrigation systems, or in cash. Tariffs can also vary between seasons, with higher tariffs charged during the dry season.

Direct abstraction

In most countries there is no charge for abstracting water directly from rivers, lakes and aquifers. However, some countries do levy volumetric charges or fees for water abstraction rights. These charges are typically levied on industries, utilities and farmers. Fees for water abstraction and discharge exist for example in France, where revenues are significant and are re-invested in the water sector by water agencies established in major basins. In Germany abstraction fees exist only for groundwater and only in some states, and their proceeds go into the general state budget. Mexico also charges for water abstraction and returns proceeds to utilities, but not to industries. Outside the OECD countries few countries charge water abstraction fees. Where they are applied the level of fees tends to be nominal, such as in Morocco, or enforcement is partial, such as for groundwater abstraction fees in Jordan. In almost all countries that have introduced abstraction fees agriculture, the major water user worldwide, is exempted from abstraction fees. Some countries allow water rights to be traded, so that the price for water itself is formed in the market. Such water trading exist in parts of Australia, Chile and the Southwestern United States).

Related Research Articles

<span class="mw-page-title-main">Water supply</span> Provision of water by public utilities, commercial organisations or others

Water supply is the provision of water by public utilities, commercial organisations, community endeavors or by individuals, usually via a system of pumps and pipes. Public water supply systems are crucial to properly functioning societies. These systems are what supply drinking water to populations around the globe. Aspects of service quality include continuity of supply, water quality and water pressure. The institutional responsibility for water supply is arranged differently in different countries and regions. It usually includes issues surrounding policy and regulation, service provision and standardization.

Guyana, meaning "land of many waters", is rich in water resources. Most of the population is concentrated in the coastal plain, much of which is below sea level and is protected by a series of sea walls. A series of shallow reservoirs inland of the coastal plain, called "water conservancies", store surface water primarily for irrigation needs. Key issues in the water and sanitation sector in Guyana are poor service quality, a low level of cost recovery and low levels of access.

Public water supply and sanitation in Germany is universal and of good quality. Some salient features of the sector compared to other developed countries are its very low per capita water use, the high share of advanced wastewater treatment and very low distribution losses. Responsibility for water supply and sanitation provision lies with municipalities, which are regulated by the states. Professional associations and utility associations play an important role in the sector. As in other EU countries, most of the standards applicable to the sector are set in Brussels. Recent developments include a trend to create commercial public utilities under private law and an effort to modernize the sector, including through more systematic benchmarking.

<span class="mw-page-title-main">Water supply and sanitation in Saudi Arabia</span>

Water supply and sanitation in Saudi Arabia is characterized by challenges and achievements. One of the main challenges is water scarcity. In order to overcome water scarcity, substantial investments have been undertaken in seawater desalination, water distribution, sewerage and wastewater treatment. Today about 50% of drinking water comes from desalination, 40% from the mining of non-renewable groundwater and only 10% from surface water in the mountainous southwest of the country. The capital Riyadh, located in the heart of the country, is supplied with desalinated water pumped from the Arabian Gulf over a distance of 467 km. Water is provided almost for free to residential users. Despite improvements, service quality remains poor, for example in terms of continuity of supply. Another challenge is weak institutional capacity and governance, reflecting general characteristics of the public sector in Saudi Arabia. Among the achievements is a significant increases in desalination, and in access to water, the expansion of wastewater treatment, as well as the use of treated effluent for the irrigation of urban green spaces, and for agriculture.

Water supply and sanitation in Yemen is characterized by many challenges as well as some achievements. A key challenge is severe water scarcity, especially in the Highlands, prompting The Times of London to write "Yemen could become the first nation to run out of water". A second key challenge is a high level of poverty, making it very difficult to recover the costs of service provision. Access to water supply sanitation in Yemen is as low or even lower than that in many sub-Saharan African countries. Yemen is both the poorest country and the most water-scarce country in the Arab world. Third, the capacity of sector institutions to plan, build, operate and maintain infrastructure remains limited. Last but not least the security situation makes it even more difficult to improve or even maintain existing levels of service.

Water resources management is a significant challenge for Mexico. The country has in place a system of water resources management that includes both central (federal) and decentralized institutions. Furthermore, water management is imposing a heavy cost to the economy.

Water supply and sanitation in Iran has witnessed some important improvements, especially in terms of increased access to urban water supply, while important challenges remain, particularly concerning sanitation and service provision in rural areas. Institutionally, the Ministry of Energy is in charge of policy and provincial companies are in charge of service provision.

Public water supply and sanitation in Denmark is characterized by universal access and generally good service quality. Some salient features of the sector in the Denmark compared to other developed countries are:

Water supply and sanitation in Israel are intricately linked to the historical development of Israel. Because rain falls only in the winter, and largely in the northern part of the country, irrigation and water engineering are considered vital to the country's economic survival and growth. Large scale projects to desalinate seawater, direct water from rivers and reservoirs in the north, make optimal use of groundwater, and reclaim flood overflow and sewage have been undertaken. Among them is the National Water Carrier, carrying water from the country's biggest freshwater lake, the Sea of Galilee, to the northern part of the Negev desert through channels, pipes and tunnels. Israel's water demand today outstrips available conventional water resources. Thus, in an average year, Israel relies for about half of its water supply on unconventional water resources, including reclaimed water and desalination. A particularly long drought in 1998–2002 had prompted the government to promote large-scale seawater desalination. In 2022, 85% of the country's drinkable water was produced through desalination of saltwater and brackish water.

Water supply and sanitation in Jordan is characterized by severe water scarcity, which has been exacerbated by forced immigration as a result of the 1948 Arab–Israeli War, the Six-Day War in 1967, the Gulf War of 1990, the Iraq War of 2003 and the Syrian Civil War since 2011. Jordan is considered one of the ten most water scarce countries in the world. High population growth, the depletion of groundwater reserves and the impacts of climate change are likely to aggravate the situation in the future.

Drinking water supply and sanitation in Egypt is characterized by both achievements and challenges. Among the achievements are an increase of piped water supply between 1998 and 2006 from 89% to 100% in urban areas and from 39% to 93% in rural areas despite rapid population growth; the elimination of open defecation in rural areas during the same period; and in general a relatively high level of investment in infrastructure. Access to an at least basic water source in Egypt is now practically universal with a rate of 98%. On the institutional side, the regulation and service provision have been separated to some extensions through the creation of a national Holding Company for Water and Wastewater in 2004, and of an economic regulator, the Egyptian Water Regulatory Agency (EWRA), in 2006. , many challenges remain. Only about one half of the population is connected to sanitary sewers. Partly because of low sanitation coverage about 50,000 children die each year because of diarrhea. Another challenge is low cost recovery due to water tariffs that are among the lowest in the world. This in turn requires government subsidies even for operating costs, a situation that has been aggravated by salary increases without tariff increases after the Arab Spring. Poor operation of facilities, such as water and wastewater treatment plants, as well as limited government accountability and transparency, are also issues.

<span class="mw-page-title-main">Water management in Greater Mexico City</span>

Greater Mexico City, a metropolitan area with more than 19 million inhabitants including Mexico's capital with about 9 million inhabitants, faces tremendous water challenges. These include groundwater overexploitation, land subsidence, the risk of major flooding, the impacts of increasing urbanization, poor water quality, inefficient water use, a low share of wastewater treatment, health concerns about the reuse of wastewater in agriculture, and limited cost recovery. Overcoming these challenges is complicated by fragmented responsibilities for water management in Greater Mexico City:

<span class="mw-page-title-main">Water supply and sanitation in Morocco</span>

Water supply and sanitation in Morocco is provided by a wide array of utilities. They range from private companies in the largest city, Casablanca, the capital, Rabat, Tangier, and Tetouan, to public municipal utilities in 13 other cities, as well as a national electricity and water company (ONEE). The latter is in charge of bulk water supply to the aforementioned utilities, water distribution in about 500 small towns, as well as sewerage and wastewater treatment in 60 of these towns.

A water tariff is a price assigned to water supplied by a public utility through a piped network to its customers. The term is also often applied to wastewater tariffs. Water and wastewater tariffs are not charged for water itself, but to recover the costs of water treatment, water storage, transporting it to customers, collecting and treating wastewater, as well as billing and collection. Prices paid for water itself are different from water tariffs. They exist in a few countries and are called water abstraction charges or fees. Abstraction charges are not covered in this article, but in the article on water pricing). Water tariffs vary widely in their structure and level between countries, cities and sometimes between user categories. The mechanisms to adjust tariffs also vary widely.

Water management in Greater Damascus, a metropolitan area with more than 4 million inhabitants, is characterized by numerous challenges, including groundwater overexploitation, increasing water demand, intermittent supply, and pollution. These challenges could be exacerbated by the impact of climate change, since projections indicate that a decrease in rainfall is likely. The quality of residential water supply mirrors social divisions within the metropolitan area, with the poorest neighborhoods receiving the worst service. Irrigation in the rural parts of Greater Damascus, in particular in the Ghouta, still accounts for about 70% of water use in the metropolitan area, with the remainder being used for residential, commercial and industrial use.

The three cities of Abu Dhabi Emirate within the United Arab Emirates – the coastal city Abu Dhabi itself as well as the inland oases Al Ain and Liwa – receive their drinking water supply entirely from desalinated seawater.

Water supply and sanitation in Japan is characterized by numerous achievements and some challenges. The country has achieved universal access to water supply and sanitation; has one of the lowest levels of water distribution losses in the world; regularly exceeds its own strict standards for the quality of drinking water and treated waste water; uses an effective national system of performance benchmarking for water and sanitation utilities; makes extensive use of both advanced and appropriate technologies such as the jōkasō on-site sanitation system; and has pioneered the payment for ecosystem services before the term was even coined internationally. Some of the challenges are a decreasing population, declining investment, fiscal constraints, ageing facilities, an ageing workforce, a fragmentation of service provision among thousands of municipal utilities, and the vulnerability of parts of the country to droughts that are expected to become more frequent due to climate change.

Water supply and sanitation in Lebanon is characterized by a number of achievements and challenges. The achievements include the reconstruction of infrastructure after the 1975–90 Civil War and the 2006 war with Israel, as well as the reform of the water and sanitation sector through a water law passed in 2000. The law created four Regional Water Establishments to consolidate numerous smaller utilities.

<span class="mw-page-title-main">Water supply and sanitation in Namibia</span>

Namibia is an arid country that is regularly afflicted by droughts. Large rivers flow only along its northern and southern borders, but they are far from the population centers. They are also far from the country's mines, which are large water users. In order to confront this challenge, the country has built dams to capture the flow from ephemeral rivers, constructed pipelines to transport water over large distances, pioneered potable water reuse in its capital Windhoek located in the central part of Namibia, and built Sub-Saharan Africa's first large seawater desalination plant to supply a uranium mine and the city of Swakopmund with water. A large scheme to bring water from the Okavango River in the North to Windhoek, the Eastern National Water Carrier, was only partially completed during the 1980s.

Water supply and sanitation in Italy is characterized by mostly good services at prices that are lower than in other European countries with similar income levels. For example, the average monthly residential water and sewer bill in Italy is 20 Euro compared to 31 Euro in France. According to the OECD, water in Italy has been underpriced for a long time. With about 240 liter per day, per capita water use for residential uses in Italy is higher than in Spain or in France, where it is about 160 liter per day. Water resources in Italy are distributed unevenly, with more abundant resources in the North and scarcer resources in the South. Most water withdrawals are for agriculture and industry, with only 18 percent of water withdrawals made for drinking water supply. About one third of the water withdrawn for municipal supply is not billed to the customers because of leakage, malfunctioning water meters and water theft.

References

  1. Momeni, Marzieh; Zakeri, Zahra; Esfandiari, Mojtaba; Behzadian, Kourosh; Zahedi, Sina; Razavi, Vahid (2019-08-20). "Comparative analysis of agricultural water pricing between Azarbaijan Provinces in Iran and the state of California in the US: A hydro-economic approach". Agricultural Water Management. 223: 105724. doi: 10.1016/j.agwat.2019.105724 . ISSN   0378-3774.
  2. Grafton, R Quentin; Chu, Long; Wyrwoll, Paul (2020-01-06). "The paradox of water pricing: dichotomies, dilemmas, and decisions". Oxford Review of Economic Policy. 36 (1): 86–107. doi:10.1093/oxrep/grz030. hdl: 10.1093/oxrep/grz030 . ISSN   0266-903X.
  3. "Water rates and charges".
  4. World Bank, by K. William Easter and Yang Liu:Cost Recovery and Water Pricing for Irrigation and Drainage Projects Archived 2009-12-29 at the Wayback Machine , Agriculture and Rural Development Discussion Paper 26, 2005, p. 15-19, accessed on February 7, 2010