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In some countries water charges have historically been - and in some cases still are - very low. This reflects the
view that provision of basic services like water is a duty of government, with access considered a right. In such
cases, end-users often pay less than the full costs. This has led to resource overexploitation, wastage, groundwater
depletion, pollution, soil salinisation and biodiversity loss.
Adequate pricing of water to end-users can improve price signals and encourage increased efficiency in water
use (oECD 2006), leading to reduced investment needs for infrastructure (both water supply and downstream
waste water treatment) and lower overall costs. Both effects can reduce environmental pressures significantly.
Under a full cost recovery approach, users should pay for the full cost of water abstraction, supply infrastructure,
preservation of the water plant’s value and all private and social costs associated with the provision of water
(see figure below).
Many
(e.g. Netherlands,
UK) have moved
towards full cost recovery
for water, involving
significant changes in
water pricing for most
newer Member States.
In the Czech Republic,
for instance, water pricing
gradually increased
from €0.02/m3 before
1990 to €0.71/m3 in
2004. Between 1990 and 1999, water withdrawals decreased by 88% (agriculture), 47% (industry) and 34%
(public water mains). All houses were provided with metering: consumption of drinking water decreased by
about 40%, from 171 litres per day/capita in 1989 to 103 litres in 2002 (UNDP, 2003). In 2003 it was about
10% below the EU average (Naumann 2003). It should be emphasised that there was no sudden imposition
of full cost recovery: implementation was gradual in order to avoid social impacts and take affordability issues
into account.
In , annual water withdrawal represents just 43% of the average total renewable water per year, but
availability varies by region and water scarcity has increased in most regions over the last ten years. A water
pricing system with two different tariffs was therefore introduced. The first tariff involves a fixed price per cubic
metre used, which varies between water supply zones. The second uses an increasing block-rate structure to
take account of different forms of water use and previously-unmet infrastructure costs. Prior to this programme,
water prices covered only about 20% of operation, maintenance and replacement costs. Water tariffs now
cover more than 80% of these costs, contributing to a more sustainable use of water by irrigation, industrial
and municipal water use.
TEEB FoR NATIoNAL AND INTERNATIoNAL PoLICy MAKERS - ChAPTER 7: PAGE 23