Water Charges 1 Corinne Waelti, seecon international gmbh

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Water Charges Find this presentation and more on: Contents 1. Introduction to Economic Tools 2. What are Water Charges? 3. Implementing Water Charges 4. Conclusion 5. References 3

Water Charges Find this presentation and more on: The Economist’s View: Externalities 4 1. Introduction to Economic Tools Source: SAVENIJE & VAN DER ZAAG (2002) Externalities arise because a substantial part of the costs of economic activities is not being paid by the actors responsible but by the general public in form of environmental damage, security, or long-term climatic risks.

Water Charges Find this presentation and more on: change their behaviour because the want to achieve maximal benefit at minimal cost. Economic Tools involve the use of prices and other market-based instruments to provide monetary incentives to change behaviour. 1. Introduction to Economic Tools Tools: Water pricing (tariffs) Subsidies Charges (irrigation, wastewater) Tradable water rights Etc. Source: [Accessed: ] 5 With Economic Tools…

Water Charges Find this presentation and more on: Definition and Impact of Charges 6 2. What are Water Charges? A charge can be defined as a ‘price’ paid on the use of the environment in order to internalise negative externalities. Behavioural change occurs, if it is less expensive than paying the charge. Less consumption or pollution can be achieved by: Less production by firms More efficient production technologies (innovation)

Water Charges Find this presentation and more on: Different Types of Water Charges 7 2. What are Water Charges? Emission/effluent charges: fee on the discharged pollutant (based on its quantity or quality) User charges: e.g. fees for the use of drinking water and wastewater treatment facilities Product charges: levied on products that are harmful to surface or ground water) Administrative charges: fees paid to authorities

Water Charges Find this presentation and more on: With the collected charges, more revenue is available to the government for reallocation. Requirements 8 3. Implementing Water Charges Measuring the emissions or effluents Setting an appropriate fee level Collecting the due amounts Allocating the collected amounts Source: ANDERSON (2002)

Water Charges Find this presentation and more on: Weak institutional capacity Inadequate institutional co-ordination Economic instability Government or polluter resistance or inertia Hindering forces 9 3. Implementing Water Charges Source: STAVINS & WHITEHEAD (1992)

Water Charges Find this presentation and more on: Internalisation of negative externalities Incentives for innovations in order to reach more efficient production technologies The implementation process is hard to control There may be a lack of strong enforcement bodies Resistance by polluters and/or the government is possible High monitoring costs It is difficult to set an optimal standard due to limited information Advantages and Disadvantages Conclusion

Water Charges Find this presentation and more on: ANDERSON, R. (2002): Incentive-Based Policies for Environmental Management in Developing Countries. Issue Brief Washington D.C.: Resources for the Future (RFF). URL: [Accessed: ]. KRAEMER, R., KAMPA, E., INTERWIES, E. (2004): The Role of Tradable Permits in Water Pollution Control. Brussels: Ecologic, Institute for International and European Environmental Policy. URL: 03/ _tradable_permits.PDF [Accessed: ]. 03/ _tradable_permits.PDF SAVENIJE, J., ZAAG, P. van der (2002): Water as an Economic Good and Demand Management. Paradigms with Pitfalls. International Water Resources Association. In: Water International 27, URL: [Accessed: ]. STAVINS, R.; WHITEHEAD, B. (1992): Pollution Charges for Environmental Protection. A Policy Link Between Energy and Environment. In: Annual Reviews Energy Environment 17, URL: [Accessed: ] References 11

Water Charges 12 “Linking up Sustainable Sanitation, Water Management & Agriculture” SSWM is an initiative supported by: Created by: