Water pricing policy in Cyprus: The implications of the water framework directive

Abstract

In Cyprus, the water tariffs for agriculture are calculated using the “Present Worth Value” method while for the households sector the “Balanced Budget” method is used. Both methods are described and evaluated in the paper. Water for irrigation purposes and household uses including industrial and tourist uses, is subsidized by as much as 78% and 38% of the total cost respectively. The prevailing policy is to achieve tariffs in agriculture that are at least equal to the operating and maintenance and administrative costs and in households equal to the full financial costs. Administrative difficulties as well as political ­unwillingness have prohibited the increase in water prices. Water prices need to be revised upwards after being augmented to reflect environmental and resource costs as well. This will promote efficiency and conservation in water use thus helping out in combating the water shortage problem. In addition this will be in accord with the provisions of the New Water Framework Directive of the EU. The implications of the WFD on the water prices will be discussed and evaluated.