IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Optimal Water Metering and Pricing

Listed author(s):
  • Andrés Chambouleyron

    (IERAL - Fundación Mediterránea)

Marginal cost pricing of running water and sewerage services has long been the default recommendation of economists and natural resource specialists to firms and local governments. However, water pricing has never been studied simultaneously with the water metering problem before. The socially optimal number of meters crucially depends on the price of water charged by the Water Company because depending on this will be the fall in consumption and therefore in water production costs and vice versa. This paper breaks the inertia as it combines both issues in one optimization problem. Both in a centralized and in a decentralized way, the optimal number of meters is determined simultaneously with the optimal per unit water rate. The Rateable Value System (RV) (i.e. the “Status Quo” or benchmark regime) is confronted with Universal Metering (UM), Optimal Metering (OM) and Decentralized Metering (DM) in terms of optimal water rates and the socially optimal number of meters. Except for RV, the results of (UM), (OM) and (DM) all recommend setting price equal to marginal cost and the optimal number of meters is hereby endogenously determined by a functional form relating water and metering costs and water demand characteristics. Conclusions and policy recommendations are drawn from the theoretical analysis.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by EconWPA in its series Industrial Organization with number 0301013.

in new window

Length: 19 pages
Date of creation: 28 Jan 2003
Handle: RePEc:wpa:wuwpio:0301013
Note: Type of Document - Tex/WordPerfect/Handwritten; prepared on IBM PC - PC-TEX/UNIX Sparc TeX; to print on HP/PostScript/Franciscan monk; pages: 19 ; figures: included/request from author/draw your own
Contact details of provider: Web page:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpio:0301013. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.