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Enhancing the performance of water prices and tariff structures in achieving socially desirable outcomes

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  • Dennis Wichelns

Abstract

Water prices can convey critical information regarding scarcity, availability, and opportunity costs. Carefully crafted water tariffs enable public officials to achieve socially desirable objectives, such as providing subsidies to poor households and discouraging inefficient water use by higher-income households and commercial customers. Yet water tariffs have not been fully successful in generating desired outcomes, particularly in urban areas of developing countries. Some of the shortcomings of water tariffs in light of the desired goals of equity, efficiency and sustainability are reviewed. Experience with increasing block-rate tariffs is highlighted, and the potential usefulness of a volume-differentiated tariff in conveying subsidies to poor households in developing countries is demonstrated.

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  • Dennis Wichelns, 2013. "Enhancing the performance of water prices and tariff structures in achieving socially desirable outcomes," International Journal of Water Resources Development, Taylor & Francis Journals, vol. 29(3), pages 310-326, September.
    • Handle: RePEc:taf:cijwxx:v:29:y:2013:i:3:p:310-326
    DOI: 10.1080/07900627.2012.721675
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    References listed on IDEAS

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    1. David le Blanc, 2008. "A Framework for Analyzing Tariffs and Subsidies in Water Provision to Urban Households in Developing Countries," Working Papers 63, United Nations, Department of Economics and Social Affairs.
    2. Keener, Sarah & Luengo, Manuel & Banerjee, Sudeshna, 2010. "Provision of water to the poor in Africa : experience with water standposts and the informal water sector," Policy Research Working Paper Series 5387, The World Bank.
    3. Komives, Kristin & Halpern, Jonathan & Foster, Vivien & Wodon, Quentin & Abdullah, Roohi, 2006. "The distributional incidence of residential water and electricity subsidies," Policy Research Working Paper Series 3878, The World Bank.
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    1. Whittington, Dale & Nauges, Céline & Fuente, David & Wu, Xun, 2015. "A diagnostic tool for estimating the incidence of subsidies delivered by water utilities in low- and medium-income countries, with illustrative simulations," Utilities Policy, Elsevier, vol. 34(C), pages 70-81.
    2. Guimarães, E.F. & Malheiros, T.F. & Marques, R.C., 2016. "Inclusive governance: New concept of water supply and sanitation services in social vulnerability areas," Utilities Policy, Elsevier, vol. 43(PA), pages 124-129.
    3. Fuente, David, 2019. "The design and evaluation of water tariffs: A systematic review," Utilities Policy, Elsevier, vol. 61(C).
    4. Molinos-Senante, María & Donoso, Guillermo, 2016. "Water scarcity and affordability in urban water pricing: A case study of Chile," Utilities Policy, Elsevier, vol. 43(PA), pages 107-116.
    5. Sonia Ferdous Hoque & Dennis Wichelns, 2013. "State-of-the-art review: designing urban water tariffs to recover costs and promote wise use," International Journal of Water Resources Development, Taylor & Francis Journals, vol. 29(3), pages 472-491, September.
    6. Marta Suárez-Varela & Roberto Martínez-Espiñeira, 2018. "A proposal for the analysis of price escalation within water tariffs: The impact of the Water Framework Directive in Spain," Environment and Planning C, , vol. 36(4), pages 726-749, June.

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