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An Exercise on the Optimal Use of Groundwater Resources

Author

Listed:
  • Laura CASTELLUCCI
  • Alessio D’AMATO

    (University of Rome ''Tor Vergata'')

Abstract

According to the EU water framework directive 2000/60, water tariffs should be based on the full cost recovery principle, including scarcity and external effects. To disregard these two aspects is not only conceptually misleading, as we try to show, but also leads to a wrong, distorted tariff. Our attempt to measure such distortion with respect to the italian case shows, for example, that water tariffs should be up to three times higher than the actual ones. That is to say, a significant correction in water prices is needed to achieve efficiency.

Suggested Citation

  • Laura CASTELLUCCI & Alessio D’AMATO, 2006. "An Exercise on the Optimal Use of Groundwater Resources," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 114(4), pages 544-560.
    • Handle: RePEc:vep:journl:y:2006:v:114:i:4:p:544-560
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    More about this item

    Keywords

    externality; non-renewable resources; scarcity; tariff correction;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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