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Water Pricing and Social Equity in Portuguese Municipalities

  • Rita Martins

    ()

    (GEMF/Faculdade de Economia, Universidade de Coimbra, Portugal)

  • Carlota Quintal

    ()

    (Faculdade de Economia, Universidade de Coimbra, Portugal)

  • Eduardo Barata

    ()

    (GEMF/Faculdade de Economia, Universidade de Coimbra, Portugal)

  • Luís Cruz

    ()

    (GEMF/Faculdade de Economia, Universidade de Coimbra, Portugal)

Water supply services are Services of General Interest (SGI), subject to specific public service obligations, such as universality, continuity, quality, affordability, transparency, and consumer protection. There is an extensive empirical literature on the design of optimal prices. However, these contributions tend to neglect the issue of universal service and equity concerning the volume of water for basic needs (the ‘essential minimum quantity’). Addressing this gap in the literature, and using empirical data for the Portuguese municipalities, this paper aims to evaluate whether income-related equity considerations are embodied in water supply Portuguese municipalities’ tariffs. Accordingly, essential minimum quantities of water for representative households are computed, and then compared with the lowest tariff block’s upper limit by water utility. Next, representative households are ranked by costs underlying essential minimum quantities and by income. This analysis also considers concentration curves and indexes which show that water bills are regressive, i.e., there is socioeconomic inequity favourable to the better-off representative households.

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File URL: http://gemf.fe.uc.pt/workingpapers/pdf/2010/gemf_2010-17.pdf
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Paper provided by GEMF - Faculdade de Economia, Universidade de Coimbra in its series GEMF Working Papers with number 2010-17.

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Length: 27 pages
Date of creation: Aug 2010
Date of revision:
Handle: RePEc:gmf:wpaper:2010-17
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  1. Maria García-valiñas, 2005. "Efficiency and Equity in Natural Resources Pricing: A Proposal for Urban Water Distribution Service," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 32(2), pages 183-204, October.
  2. Roseta-Palma, Catarina & Monteiro, Henrique, 2008. "Pricing for Scarcity," MPRA Paper 10384, University Library of Munich, Germany.
  3. J. Elnaboulsi, 2001. "Nonlinear Pricing and Capacity Planning for Water and Wastewater Services," Water Resources Management, Springer, vol. 15(1), pages 55-69, February.
  4. Paola Fabbri & Giovanni Fraquelli, 2000. "Costs and Structure of Technology in the Italian Water Industry," Empirica, Springer, vol. 27(1), pages 65-82, March.
  5. Kakwani, Nanak & Wagstaff, Adam & van Doorslaer, Eddy, 1997. "Socioeconomic inequalities in health: Measurement, computation, and statistical inference," Journal of Econometrics, Elsevier, vol. 77(1), pages 87-103, March.
  6. Arbues, Fernando & Garcia-Valinas, Maria Angeles & Martinez-Espineira, Roberto, 2003. "Estimation of residential water demand: a state-of-the-art review," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(1), pages 81-102, March.
  7. Rita Martins & Adelino Fortunato, 2005. "Residential water demand under block rates: a Portuguese case study," GEMF Working Papers 2005-09, GEMF - Faculdade de Economia, Universidade de Coimbra.
  8. Mark Armstrong & Simon Cowan & John Vickers, 1994. "Regulatory Reform: Economic Analysis and British Experience," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510790, June.
  9. Monteiro, Henrique, 2008. "Evolution of cost recovery levels in the Portuguese water supply and wastewater industry 1998-2005," MPRA Paper 11490, University Library of Munich, Germany.
  10. Castro-Rodriguez, Fidel & Da-Rocha, Jose Maria & Delicado, Pedro, 2002. "Desperately Seeking Theta's: Estimating the Distribution of Consumers under Increasing Block Rates," Journal of Regulatory Economics, Springer, vol. 22(1), pages 29-58, July.
  11. Bithas, Kostas, 2008. "The sustainable residential water use: Sustainability, efficiency and social equity. The European experience," Ecological Economics, Elsevier, vol. 68(1-2), pages 221-229, December.
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