Handbook of Sustainable Development Planning
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Handbook of Sustainable Development Planning

Studies in Modelling and Decision Support

  • Elgar original reference

Edited by M. A. Quaddus and M. A.B. Siddique

This authoritative Handbook comprehensively examines the current status and future directions of model-based systems in decision support and their application to sustainable development planning.
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Chapter 10: Modelling Sustainable Water Prices

Pawel Bartoszczuk and Yoshiteru Nakamori

Extract

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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