Optimizing Water Sustainability: Revealing Cost Recovery Strategies in the Canary Islands (Spain). Stochastic Frontier Model

Abstract

Article 9 of the Water Framework Directive (WFD) introduces cost recovery as an instrument aligned with the 'polluter pays' principle, aiming to contribute to the overall well-being of water bodies. In this regard, this research focuses on application of the cost recovery method in the context of the Canary Islands (Spain). The study provides a comprehensive description and analysis of the methodology established for the second cycle of planning (2015–2021) in the Canary Islands, offering a comparative assessment of results for each island. We employ a Stochastic Frontier Model, which allows us to assess the efficiency of different water production techniques. The results should be of great interest to public decision makers in the field of water management to minimize cost, allocate resources efficiently or review water tariffs. The findings underscore substantial variations in cost recovery across islands, emphasizing the need for enhanced water infrastructure methods and data acquisition. Future research needs to extend the years on cost recovery to incorporate economies of scale and type of ownership.