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Edited by Tony Fitzpatrick
Chapter 4: The affordability of water and energy pricing: the case of Germany
Water and energy services are considered to be goods of general interest. At the same time they are first and foremost economic goods whose markets have been affected by both remarkable changes and new challenges over the last 10 to 15 years. Global processes like climate and demographic changes, globalization and economic development, as well as increasing resource scarcity, have significantly altered the economic and regulatory frameworks for such utilities. Social concerns about sufficient access to water and energy, particularly around issues of affordability, have intensified in the course of these processes. However, these concerns also have to take into account the market and policy implications of social interventions. In relation to the provision of drinking water, the implementation of Article 9 of the EC Water Framework Directive is of particular relevance for current water pricing policies in the European Union (EU). This norm is mainly driven by the objective of water conservation ('good status') and it calls, in general, for full cost recovery and the polluter-pays principle. For water prices, this means a readjustment and a tendency towards an increase in (potable) water prices. However, to a large extent these adjustments have not yet been implemented - even in countries with a relatively high price level, like Germany (see Gawel 2012). For the energy sector - which means electricity, heating and mobility - the changes are more noticeable, especially with regard to prices of energy feedstock (see Bardt 2008: 3).
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