Tarifas sociales para el servicio de agua potable en Arica, Chile y su impacto teórico en la distribución del ingreso de los usuarios

Abstract

The purpose of this paper is to evaluate the redistributive effect of a system of social tariffs of water infply services, compared to the current direct subsidies from the government to low-income consumers. The goal is to determine social prices for non-deficit operation, using a mathematical model based on the theory of welfare economics. A scheme of differentiated tariffs according to income of consumers in the city of Arica, Chile, is evaluated as to the theoretical impact on the distribution of wealth of these consumers. From the results of this investigation, we concluded that social tariffs have a small advantage over direct subsidies in terms of redistribution, but undesirable side effects are produced, creating market distortions that could cancel out any significant redistribution of wealth.