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CE7413 Water Resources Systems
Course Name: Water Resources Systems Instructor: Dr. Sangam Shrestha Professor: Water Engineering and Management Institution: Asian Institute of Technology
Water Pricing and Water Prices
Objectives of Water Pricing Water Pricing Methods Water Price Elasticity Residential, Agricultural, Industrial
Water pricing
Term that covers various processes to assign a price to water. Differs under different circumstances such as bottled water, water tanker, utility tariffs, irrigation, direct abstraction. Price can be set in the market or determined administratively.
Water Prices
Price paid by domestic user for water distribution, production, distribution and collective purification, collection and treatment of wastewater based on a reference consumption.
Objectives of Water Pricing
Better water allocation and management, cost recovery, raising revenue income.
Water levies in Australia
Water levies are implemented in Australia.
Water levies in Mexico
Water levies are implemented in Mexico.
Water Pricing Principles
Principles for water pricing: cost reflection, revenue adequacy, sustainable investment, regulatory efficiency, public interest.
Water Pricing Methods
Declining block rates, increasing block rates, seasonal block rates, flat rates, uniform rates.
Declining Block Rates
The price of water decreases as more water is used. Discourages conservation.
Increasing Block Rates
The price of water increases as more water is used. Known to reduce average and peak water demand.
Flat Rates
Charge the same fixed amount regardless of water consumption. Every customer in the same class is charged the same amount.
Uniform Rates
Constant rate per unit of usage for all levels of use. All customers in the same class are charged the same unit rate for each unit of consumption.
Seasonal Rates
Charge a higher price during peak season. Different rate structures are set for summer and winter.
Price Elasticity of Water Demand
The relationship between water pricing and consumption. Price elasticity measures the responsiveness of quantity demanded to changes in price.
Consumption charge formula
Price (p) * Quantity (q)
Seasonal rates
Higher price during peak season
Price elasticity of demand
Percentage change in quantity demanded / Percentage change in price
Inelastic demand
Relative change in quantity demanded < Relative change in price
Elastic demand
Percentage change in quantity demanded > Percentage change in price
Residential water use
Relatively inelastic, changes in price have little effect
Industrial water use
More responsive to price changes
