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The Political Economy of Water Abstraction Charges


  • Stephen Merrett


An important economic instrument in the management of a river catchment's water resources is the charges made by government for the abstraction of water from ground and surface sources. Abstraction charges are a form of rent. However, the classical theory of differential rent has limited application to abstraction prices because that theory's assumption of competition in the supply of the natural resource does not hold in this case. Here, the property rights of individual households and of institutions to draw water are assigned by a state monopoly. In order to understand the specific and contingent practices of government in different countries, a taxonomy of charge-setting principles is proposed. This paper sets out six principal fields of action for sustainable water resource planning and, in that context, recommends full incentive charging as the basis of catchment policy.

Suggested Citation

  • Stephen Merrett, 1999. "The Political Economy of Water Abstraction Charges," Review of Political Economy, Taylor & Francis Journals, vol. 11(4), pages 431-442.
  • Handle: RePEc:taf:revpoe:v:11:y:1999:i:4:p:431-442
    DOI: 10.1080/095382599106904

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    References listed on IDEAS

    1. Hearne, R.R. & Easter, K.W., 1995. "Water Allocation and Water Markets. An Analysis of Gains-from-Trade in Chile," Papers 315, World Bank - Technical Papers.
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    1. Yaroslav Kotlyarevskyi & Iryna Dovha, 2015. "Transformation of water management fiscal regulation: assessment of the expediency to implement the european practice," Ukrainian Journal Ekonomist, Yuriy Kovalenko, issue 12, pages 36-38, December.

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