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An Incentive Water Pricing Policy for Sustainable Water Use

Author

Listed:
  • Jihad Elnaboulsi

    (CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE])

Abstract

By adopting the Water Framework Directive (WFD), the European Commission and the Council made recommendations for water pricing policies in EU Member States with a view to enhancing the sustainability of water resources. Clearly, the Directive integrates economic instruments in environmental policies to provide incentives for the sustainable use of water resources. Our analysis will focus on public water utilities, required to be financially self-sufficient, facing demand and capacity shocks. The paper deals with the simultaneous determination of incentive pricing policies and investment rules under an ex ante maximum demand charge. We will characterize the welfare-optimal capacity selection rule and the welfare-optimal maximum demand pricing rule. Heterogeneous consumers demands are considered when tariffs are set ex ante, before demands are known. Our results are state-contingent nonlinear pricing that responds to demand fluctuations and capacity constraints.

Suggested Citation

  • Jihad Elnaboulsi, 2009. "An Incentive Water Pricing Policy for Sustainable Water Use," Post-Print hal-00447922, HAL.
    • Handle: RePEc:hal:journl:hal-00447922
    DOI: 10.1007/s10640-008-9218-8
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    Cited by:

    1. Suratin Aloysius & Triakuntini Eka & Herdiansyah Herdis, 2019. "Effects of the implementation of a progressive tariffs policy on water management in DKI Jakarta, Indonesia," Environmental & Socio-economic Studies, Sciendo, vol. 7(4), pages 36-44, December.
    2. Sidibe, Yoro & Williams, Timothy O., 2015. "Valuation of water in large-scale agricultural land investments in Mali: Efficiency and equity trade-offs," 2015 Conference, August 9-14, 2015, Milan, Italy 212235, International Association of Agricultural Economists.
    3. Friedman, A., 2010. "Water-Saving Technology and Efficient Tariffs," Journal of the New Economic Association, New Economic Association, issue 8, pages 35-53.
    4. Alla Fridman, 2015. "Water pricing reform analysis: alternative scenarios," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 18(3), pages 258-266, September.

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