How to Integrate Social Objectives into Water Pricing

Abstract

The social dimension should be addressed in the sustainability of water services provision, but it is less well studied than the economic and environmental ones. The debate between pros and cons of water privatization led the Organisation for Economic Co-operation and Development (OECD) to publish a seminal paper on social issues in water pricing, back in 2003. Relying on this document and other literature review, we successively present various solutions to support “water-poor” people in the payment of their charges: reducing bills for targeted populations (rebates, increasing blocks), supporting the income of targeted populations, reducing bills for all customers, and reintroducing taxation as a source of income. A general outcome is that social tariff design entails administrative costs that may offset the benefits it is supposed to generate. Lastly, we advocate the development of new software to assess the redistributive effects of ongoing tariffs, and tariff changes between categories of residents and with the water utilities’ capacity to invest.