Studies in Modelling and Decision Support
- Elgar original reference
Edited by M. A. Quaddus and M. A.B. Siddique
10 Modelling sustainable water prices Pawel Bartoszczuk and Yoshiteru Nakamori Introduction Establishing a rational price for water is very important for both the water companies and consumers. The price should be based on the cost of supply to achieve a more reasonable use of water. Following the end of the Second World War, domestic consumers in Central European countries normally paid a small percentage of the cost of drinking water while the state subsidized the rest. After 1990 water charges suddenly increased and constituted a signiﬁcant proportion of the household’s average income. This led to a signiﬁcant decrease in water consumption and underutilization of existing plant capacity. One of the decisive factors in water consumption decrease was the installation of meters. Whether this observed tendency for water consumption to decrease can be stopped and when this might happen has been unknown until now. There is relatively little knowledge of the impact of price changes on water demand. Moreover, there is no satisfactory model to explain this phenomenon. In this chapter, basic principles for setting water prices will be presented by providing incentives for efﬁcient water use, distributing cost equitably, considering social issues and keeping the tariff rate structure simple for easy implementation. It proposes a method for assessing the impact of economic incentives such as charges on water consumption. This method is applied to the speciﬁc conditions of Central European countries. Finally, conclusions and hints for correct systems prices which aim at more sustainable consumption will...
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