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Water Pricing Policy as Tool to Induce Efficiency in Water Resources Management

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  • Marcos García-López

    (University Institute of Water and Environmental Sciences, University of Alicante, 03690 San Vicente del Raspeig, Spain)

  • Borja Montano

    (University Institute of Water and Environmental Sciences, University of Alicante, 03690 San Vicente del Raspeig, Spain)

  • Joaquín Melgarejo

    (University Institute of Water and Environmental Sciences, University of Alicante, 03690 San Vicente del Raspeig, Spain)

Abstract

This research seeks to determine and analyze the reaction to an increase in the water invoice with the aim of introducing improvements in wastewater treatments. To this end, the purification situation is analyzed and the price elasticities of demand are obtained through Ordinary Minimum Squares. The results show that there are several small noncompliant treatment plants, as well as a complex interaction among consumption, price, and income. In many cases, the results offer small or significant differences without a clear pattern. However, it highlights the number of household members as it is strongly related to consumption and price and not considering it in the elaboration or modification of the water tariff would lead to inefficiencies. A reduction in revenue has also been found due to the strong consumer reaction, so it is necessary to assess in more depth what kind of price change would be most appropriate, as well as whether such measures would be best suited to address the problem.

Suggested Citation

  • Marcos García-López & Borja Montano & Joaquín Melgarejo, 2020. "Water Pricing Policy as Tool to Induce Efficiency in Water Resources Management," IJERPH, MDPI, vol. 17(10), pages 1-19, May.
    • Handle: RePEc:gam:jijerp:v:17:y:2020:i:10:p:3534-:d:359697
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    References listed on IDEAS

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    Cited by:

    1. Yali Zhao & Min Li, 2020. "Effect of Water-Saving Society Policy on Water Consumption in the Cities of China: A Propensity Score Matching Analysis," IJERPH, MDPI, vol. 17(21), pages 1-14, November.
    2. García-López, Marcos & Montano, Borja & Melgarejo, Joaquín, 2022. "Alternative tariff structures and household composition: Evidence from Spain's Valencia region," Utilities Policy, Elsevier, vol. 79(C).
    3. Qiong Su & Raghupathy Karthikeyan, 2023. "Regional Water Stress Forecasting: Effects of Climate Change, Socioeconomic Development, and Irrigated Agriculture—A Texas Case Study," Sustainability, MDPI, vol. 15(12), pages 1-14, June.

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