IDEAS home Printed from https://ideas.repec.org/a/eee/agiwat/v145y2014icp92-97.html
   My bibliography  Save this article

Best practice pricing principles and the politics of water pricing

Author

Listed:
  • Cooper, Bethany
  • Crase, Lin
  • Pawsey, Nicholas

Abstract

Considerable progress has been claimed regarding the establishment of economic reforms in the water sector in Australia, including the development of cost-reflective pricing for water users. This is evidenced by the highly developed status of water markets, especially in agricultural areas, and the substantive efforts that have been made to measure and include the cost of capital and its replacement in charges paid by water users. However, recent government responses to secure additional water for environmental purposes have given rise to a spate of public investments in irrigation infrastructure arguably reminiscent of bygone eras of policy (see, for example, Musgrave, 2008). A critically important, but under-investigated feature of this latest policy response, is that irrigators are subsequently not obliged to pay water prices that reflect the cost of publicly funded irrigation infrastructure. This paper investigates the processes for establishing water charges that are generally cost reflective and contrasts these with the political influences that can markedly distort best practice water pricing. An assessment framework that draws from best practice pricing principles embodied in the National Water Initiative, the Water Industry Regulatory Order and the Victorian Essential Services Commission Act (2001) is used as a framework to consider areas of improvement. Whilst special attention is given to arrangements in Victoria, Australia, we argue that caution about the risks of political interference in water pricing in irrigation should be broadly understood.

Suggested Citation

  • Cooper, Bethany & Crase, Lin & Pawsey, Nicholas, 2014. "Best practice pricing principles and the politics of water pricing," Agricultural Water Management, Elsevier, vol. 145(C), pages 92-97.
    • Handle: RePEc:eee:agiwat:v:145:y:2014:i:c:p:92-97
    DOI: 10.1016/j.agwat.2014.01.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0378377414000274
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.agwat.2014.01.011?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lin Crase & Nicholas Pawsey & Sue O'Keefe, 2013. "A Note on Contradictions in Australian Water Policy," Economic Papers, The Economic Society of Australia, vol. 32(3), pages 353-359, September.
    2. Crase, Lin & O'Keefe, Sue & Dollery, Brian, 2013. "Talk is cheap, or is it? The cost of consulting about uncertain reallocation of water in the Murray–Darling Basin, Australia," Ecological Economics, Elsevier, vol. 88(C), pages 206-213.
    3. Abbott, Malcolm & Cohen, Bruce, 2009. "Productivity and efficiency in the water industry," Utilities Policy, Elsevier, vol. 17(3-4), pages 233-244, September.
    4. Brooks, Robert & Harris, Edwyna, 2014. "Price leadership and information transmission in Australian water allocation markets," Agricultural Water Management, Elsevier, vol. 145(C), pages 83-91.
    5. Kolm, Serge-Christophe, 1996. "Playing Fair with Fairness (A Comment on Arnsperger's 'Envy-Freeness and Distributive Justice')," Journal of Economic Surveys, Wiley Blackwell, vol. 10(2), pages 199-215, June.
    6. Lin Crase & Eve Merton, 2013. "Correcting Misconceptions about Links between Water Planning and Food Security in the Murray–Darling Basin," Economic Papers, The Economic Society of Australia, vol. 32(3), pages 298-307, September.
    7. Joe Wallis & Brian Dollery, 1999. "Market Failure, Government Failure, Leadership and Public Policy," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-37296-2.
    8. Nicholas Pawsey & Lin Crase, 2013. "The Mystique of Water Pricing and Accounting," Economic Papers, The Economic Society of Australia, vol. 32(3), pages 328-339, September.
    9. Alistair Watson & Eve Merton, 2013. "Food Security in Australia: Some Misplaced Enthusiasms?," Economic Papers, The Economic Society of Australia, vol. 32(3), pages 317-327, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Crase, Lin & Khosroshahi, Saeideh & Cooper, Bethany, 2020. "Hydrology, topography and demography matter: Why care needs to be exercised when assessing water prices and regulation and the extent to which they conform with best practice," Utilities Policy, Elsevier, vol. 62(C).
    2. Jayanath Ananda & Nicholas Pawsey, 2019. "Benchmarking service quality in the urban water industry," Journal of Productivity Analysis, Springer, vol. 51(1), pages 55-72, February.
    3. Jayanath Ananda & Nicholas Pawsey & Tahmid Nayeem, 2022. "Customer‐centric regulation: The case of Victorian urban water sector," Regulation & Governance, John Wiley & Sons, vol. 16(2), pages 536-556, April.
    4. Zeyu Wang & Juqin Shen & Fuhua Sun & Zhaofang Zhang & Dandan Zhang & Yizhen Jia & Kaize Zhang, 2019. "A Pricing Model for Groundwater Rights in Ningxia, China Based on the Fuzzy Mathematical Model," IJERPH, MDPI, vol. 16(12), pages 1-20, June.
    5. Romano, Giulia & Guerrini, Andrea & Senoner, Thomas, 2020. "Establishing a new water tariff method that complies with european principles and respects statutory autonomy: The case of South Tyrol," Utilities Policy, Elsevier, vol. 64(C).
    6. Andrea Pronti & Julio Berbel, 2020. "Analysis of the impact of a volumetric tariff for irrigation in Northern Italy through the “Inverse DiD†approach," SEEDS Working Papers 1320, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jul 2020.
    7. Cortignani, Raffaele & Dell’Unto, Davide & Dono, Gabriele, 2018. "Recovering the costs of irrigation water with different pricing methods: Insights from a Mediterranean case study," Agricultural Water Management, Elsevier, vol. 199(C), pages 148-156.
    8. Silvestre García de Jalón & Marta González del Tánago & Carlos Alonso & Diego García de Jalón, 2017. "The Environmental Costs of Water Flow Regulation: an Innovative Approach Based on the ‘Polluter Pays’ Principle," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(9), pages 2809-2822, July.
    9. Julio Cesar Pascale Palhares & Esther R. Afonso & Augusto H. Gameiro, 2019. "Reducing the water cost in livestock with adoption of best practices," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 21(4), pages 2013-2023, August.
    10. Javier Martínez-Dalmau & Carlos Gutiérrez-Martín & Alfonso Expósito & Julio Berbel, 2023. "Analysis of Water Pricing Policy Effects in a Mediterranean Basin Through a Hydroeconomic Model," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 37(4), pages 1599-1618, March.
    11. Hao Wang & Sander Meijerink & Erwin van der Krabben, 2020. "Institutional Design and Performance of Markets for Watershed Ecosystem Services: A Systematic Literature Review," Sustainability, MDPI, vol. 12(16), pages 1-26, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cooper, Bethany & Crase, Lin & Rose, John M., 2018. "Cost-reflective pricing: empirical insights into irrigators’ preferences for water tariffs," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 62(2), April.
    2. Malcolm Abbott & Bruce Cohen, 2017. "Drawing a Line in the Sand: Valuing Regulated Assets of the Australian Water Industry," Economic Papers, The Economic Society of Australia, vol. 36(1), pages 32-48, March.
    3. Ananda, Jayanath & Hampf, Benjamin, 2015. "Measuring environmentally sensitive productivity growth: An application to the urban water sector," Ecological Economics, Elsevier, vol. 116(C), pages 211-219.
    4. Jayanath Ananda & Nicholas Pawsey & Tahmid Nayeem, 2022. "Customer‐centric regulation: The case of Victorian urban water sector," Regulation & Governance, John Wiley & Sons, vol. 16(2), pages 536-556, April.
    5. B. James Deaton & Bethany Lipka, 2023. "Cooperation between First Nations and Municipalities: Do Water-Sharing Arrangements Improve Drinking Water Quality?," Land Economics, University of Wisconsin Press, vol. 99(3), pages 433-457.
    6. Shivendra Kumar & Andrew Groth & Ljubo Vlacic, 2015. "Cost Evaluation of Water and Wastewater Treatment Plants Using Water Price Index," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 29(9), pages 3343-3356, July.
    7. Henriques, Alda A. & Camanho, Ana S. & Amorim, Pedro & Silva, Jaime G., 2020. "Performance benchmarking using composite indicators to support regulation of the Portuguese wastewater sector," Utilities Policy, Elsevier, vol. 66(C).
    8. James I. Price & Steven Renzetti & Diane Dupont & Wiktor Adamowicz & Monica B. Emelko, 2017. "Production Costs, Inefficiency, and Source Water Quality: A Stochastic Cost Frontier Analysis of Canadian Water Utilities," Land Economics, University of Wisconsin Press, vol. 93(1), pages 1-11.
    9. Peeter Peda & Giuseppe Grossi & Margo Liik, 2013. "Do ownership and size affect the performance of water utilities? Evidence from Estonian municipalities," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(2), pages 237-259, May.
    10. Di Foggia, Giacomo & Beccarello, Massimo, 2018. "Improving efficiency in the MSW collection and disposal service combining price cap and yardstick regulation: The Italian case," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 79, pages 223-231.
    11. Lucinda, Claudio Ribeiro & Anuatti, Francisco, 2017. "Economies of Scale and Scope in the Sanitation Sector," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 37(2), November.
    12. Sarah Ann Wheeler, 2022. "Debunking Murray‐Darling Basin water trade myths," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 66(4), pages 797-821, October.
    13. Amjad Ali & Marc Audi & Ismail Senturk & Yannick Roussel, 2022. "Do Sectoral Growth Promote CO2 Emissions in Pakistan? Time Series Analysis in Presence of Structural Break," International Journal of Energy Economics and Policy, Econjournals, vol. 12(2), pages 410-425, March.
    14. Romano, Giulia & Molinos-Senante, María & Guerrini, Andrea, 2017. "Water utility efficiency assessment in Italy by accounting for service quality: An empirical investigation," Utilities Policy, Elsevier, vol. 45(C), pages 97-108.
    15. Petheram, C. & McKellar, L. & Holz, L. & Poulton, P. & Podger, S. & Yeates, S., 2016. "Evaluation of the economic feasibility of water harvesting for irrigation in a large semi-arid tropical catchment in northern Australia," Agricultural Systems, Elsevier, vol. 142(C), pages 84-98.
    16. Amy MacMahon & Kiah Smith & Geoffrey Lawrence, 2015. "Connecting resilience, food security and climate change: lessons from flooding in Queensland, Australia," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 5(3), pages 378-391, September.
    17. Carvalho, Pedro & Marques, Rui Cunha & Berg, Sanford, 2012. "A meta-regression analysis of benchmarking studies on water utilities market structure," Utilities Policy, Elsevier, vol. 21(C), pages 40-49.
    18. Tooraj Jamasb and Manuel Llorca, 2019. "Energy Systems Integration: Economics of a New Paradigm," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    19. Wallis, Joe, 2006. "Evaluating economic theories of NPOs: A survey, a case study and some new directions for socio-economics," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(6), pages 959-979, December.
    20. Pérez-Blanco, C.D. & Gutiérrez-Martín, C., 2017. "Buy me a river: Use of multi-attribute non-linear utility functions to address overcompensation in agricultural water buyback," Agricultural Water Management, Elsevier, vol. 190(C), pages 6-20.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:agiwat:v:145:y:2014:i:c:p:92-97. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/agwat .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.