Studies in Modelling and Decision Support, Second Edition
Edited by M. A. Quaddus and M. A.B. Siddique
Chapter 10: Modelling sustainable water prices
Establishing a rational price for water is very important both for the water companies and for consumers. The price should be based on the cost of supply to reach a more reasonable use of water. This chapter – after reviewing the main issues connected with sustainable development and water pricing – 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 the countries in Central Europe. Following the end of the Second World War, domestic consumers in the countries of that region normally paid a small percentage of the cost of drinking water, while the rest was paid by the state in the form of subsidies. After 1990 water charges suddenly increased and reached a significant proportion of the household’s average income. This led to a considerable decrease of water consumption and not fully utilized capacity of existing plants. One of the decisive factors of the decrease of water consumption was installation of meters.
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