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Water prices

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Assessment made on  02 Oct 2003

Generic metadata

Classification

Water Water (Primary theme)

DPSIR: Response

Identification

Indicator codes
  • WQ 005
Geographical coverage:

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Contents
 

Policy issue:  Are water prices and water saving technologies effective tools to improve water conservation?

Key messages

  • Many countries have made significant progress towards more effective water pricing policies that should reduce water demand

  • However, far less progress has been made in the agricultural sector compared to the domestic and industrial sectors

Figures

Key assessment

Water pricing is an example of one of the measures used to control or reduce water demand by different users. The water framework directive requires Member States to ensure, by 2010, that water-pricing policies provide adequate incentives to use water resources efficiently and to recover the true costs of water services in an equitable manner. Most countries are progressing towards water pricing systems. Nonetheless, quantifying the effects of water pricing at the European scale is complex due to the lack of reliable and comparable data, and the combined effects of other water demand measures.

There has been a general trend towards higher water prices in real terms for the domestic sector throughout Europe in the 1990s (Figure 5.16). There are wide variations in water charges within individual countries and between different countries in Europe. This is because of the wide range of factors that determine local water prices, and whether there is a full recovery of costs, including those for water treatment and supply, for sewage treatment and for environmental damage. Water charges usually represent a very small percentage of household income or of GDP per capita (range 0.2% in Oslo to 3.5% in Bucharest in 1996). In many accession countries, water prices were heavily subsidised before 1990, but there was a marked increase in prices during transition, resulting in lower water use. In Hungary, for example, water prices increased 15-fold after subsidies were removed, which led to a reduction in water use during the 1990s of about 50% (Figure 5.17).

Industry also tends to be price sensitive to water supply and treatment costs. Consequently, higher water prices are leading to reduced water use through watersaving technology and re-use. Agriculture, which is still widely subsidised, pays much lower prices than the other main sectors, particularly in southern Europe (Figure 5.18). Increased prices are likely to produce a more marked effect on water use where supplies are metered, water prices are high in relation to income, exploitation is high and where public supply is a high percentage of total supply. Domestic and industrial supplies are now metered in most countries, whilst irrigation supplies are metered only in a few.

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