Ownership, Investment Policies and Funding Choices of Italian Water Utilities: An Empirical Analysis

Nowadays, the efficient management of water has become the focus of vast debate, both in the academic literature and in the practical and regulatory field. Due to the growing importance and scarcity of water resources, it has become crucial to better understand how to improve the organizational efficiency of water utilities. By adopting an accounting perspective and using statistical methods, this paper analyzes whether and to what extent investment and financial strategies differ among clusters of water utilities with different ownership structures. The paper focuses on the Italian water industry, a context considered particularly appropriate due to the coexistence of utilities with different ownership structures. The main results of the paper show that ownership affects the level of investment as well as the financial structure and costs of water utilities. The evidence provided by this study should encourage national governments and regulatory authorities to select water utilities with the greatest investment potential measured in terms of financial efficiency and effectiveness.     

Water Governance 2.0: A Review and Second Generation Research Agenda

Water scholars and practitioners generally agree that improving water governance is the key to addressing water insecurity in developing countries. We review the literature on water governance and argue for a second-generation research agenda, which pays more attention to the study of incentive structures, is multi and inter-disciplinary in orientation and with clear policy implications. We then illustrate how theories drawn from public economics, new institutional economics, political economy and public administration can help diagnose the challenges of integrated water resources management, improving efficiency of water utilities, privatization of utilities and public-private partnerships, water pricing reforms, virtual waters/water trading, among others. We conclude that these tools can help advance the second-generation research agenda on water governance.     

Issues and Implications of Carbon-Abatement Discounting and Pricing for Drinking Water System Design in Canada

Water utilities generate greenhouse gas (GHG) emissions when they construct, retrofit, and operate their water distribution systems. The prospect of introducing carbon-abatement strategies such as carbon pricing and using low discount rates for project planning could potentially change the manner in which water utilities plan and design their drinking water systems. The objectives of this paper are to: (i) Review the current issues and controversies surrounding the choice of discounting rate and carbon prices in Canada to reduce the GHG emissions linked to operating water systems in Canada; (ii) Review previous research that has examined the impact of discounting and carbon pricing on design decisions in water supply and distribution systems, and; (iii) Illustrate the possible implications of carbon-abatement strategies (discounting and carbon pricing) on the design of Canadian water systems by way of a real-world case study. The implications of discount rate and carbon price uncertainty on water distribution system design are illustrated with the Amherstview-Odessa water transmission system in Ontario, Canada. The results of the Amherstview study indicated that lowering discount rate led to significant increases in electricity costs. The study results also suggested that for a sufficiently low discount rate of 1.4%, increasing carbon price led to a larger pipe size and pipe cost to offset carbon costs levied on fossil-fuel based electricity to operated the pumps for the life of the system. Additional studies are needed on large-scale water systems to inform decisions on system upgrades taken by water utility managers.     

Urban water tariff structure and cost recovery opportunities in India.

Given the high level of capital investment and the history of government subsidized services, full cost pricing of water services has yet to take hold in India. As a result, it remains broadly underpriced leading to public perception that water is "free" The current tariff levels in India are too low to cover even operating costs. This paper examines the existing Indian urban water tariff models (fixed tariff, volumetric tariff, increasing block tariff etc.), their relevance and problems. It was found that none of the tariff structures could satisfy all the design objectives (cost recovery, economic efficiency, equity, affordability etc.). Also subsidies are not explicit and well targeted for poor population. There are several studies and issues that do demonstrate the opportunities for tariff increase and improved cost recovery. This paper highlights the results of such studies and brings out issues needing consideration. Improved cost recovery would lead to improved financial status of the water utilities. Also, subsidies, if designed suitably and well targeted, would serve the concerns of the economically weaker sections. Such reform process would eventually lead to socio-economic sustainability.     

Urban water pricing in Yemen: a comparison of increasing block tariffs to other pricing schemes

This study examines the viability of increasing block tariffs (IBTs) to achieve the right balance between efficiency, financial requirements and equity, and compares them to alternative pricing schemes. Using numerical examples, it analyzes the IBT structure of two water utilities in Yemen. The main conclusion is that IBTs exhibit remnants of old thinking among policy makers to promote cheap water for people. In view of similar results from other regions, the current practice of IBTs in developing countries has significant deficiencies and could be replaced by simpler pricing schemes such as a uniform price with a rebate or a discount.     

综合利用水库水价核算研究

2011年中央1号文件和中央水利工作会议明确提出,要积极推进水价改革,充分发挥水价调节作用,大力促进节约用水和产业结构调整.水价核算是供水单位都要开展的一项技术工作.综合利用水库共用资产、成本费用采用库容比例法进行分摊.以华北地区大型水库A和水库B为例,就综合利用水库水价核算中生产经营分摊比例计算方法及对水价水平的影响加以论述,提出水库水价改革应遵循的思路.     

Simulating the Impact of Pricing Policies on Residential Water Demand: A Southern France Case Study

The case study conducted in this paper looks at residential water pricing from three different points of view. It first describes existing urban water-pricing practices in Southern France, emphasizing that pricing is not yet being used as a tool for providing economic incentives to save water. It then looks at the observed impact of pricing on water consumption, through an econometric analysis of a cross-sectional data set. The analysis suggests that demand, with an estimated price elasticity of −0.2, is not yet very responsive to price variation. A regional water model (300 municipalities) is then developed and used to simulate the potential impact of various water-pricing scenarios on aggregate water demand, aggregate water sales revenue, and consumer surpluses. The results illustrate the trade-offs that have to be made between the search for environmental effectiveness, cost recovery, and equity when implementing complex water-pricing structures such as block rates or seasonal water pricing.     

Economic considerations and decision support tool for wastewater reuse scheme planning.

The reuse of upgraded wastewater for beneficial uses is increasingly adopted and accepted as a tool in water management. However, funding of schemes is still a critical issue. The focus of this paper is on economic considerations of water reuse planning. A survey of pricing mechanisms for reclaimed water revealed that most schemes are subsidised to a great extent. In order to minimise these state contributions to the implementation and operation of reuse projects, their planning should identify a least cost design option. This also has to take into account the established pricing structure for conventional water resources and the possibility of gaining revenues from reclaimed water pricing. The paper presents a case study which takes into account these aspects. It evaluates different scheme designs with regard to their Net Present Value (NPV). It could be demonstrated that for the same charging level, quite different amounts of reclaimed water can be delivered while still producing an overall positive NPV. Moreover, the economic feasibility and competitiveness of a reuse scheme is highly determined by the cost structure of the conventional water market.     

Efficiency of Urban Water Supply Utilities in India

The two parameters of services output of water utilities are the per capita water available for consumption and the hours for which water is supplied per day. However, water utilities in India differ on the level of these outputs substantially. This paper uses the data for water utilities in 31 cities to analyse their performance in delivery of services. Using data envelopment analysis, a measure of technical efficiency for various utilities is calculated. The results indicate that water utilities can increase the delivery of water on a per capita basis and increase the hours of supply per day by about 18%. Nearly 37% of the increase in services could result from changing the scale of operation. This paper also discusses if the institutional framework within which these utilities operate has implications on their efficiency.     

Water Pricing in Irrigated Agriculture

Access to water is viewed as a basic human right, a social necessity and a critical environmental resource in spite of the fact that water also has its own financial and economic values. Thus, the selection of set prices and pricing mechanisms addressing these contradicting views is remarkably complicated. On the other hand, water pricing is typically viewed as a good means to cover initial costs and sustain resources invested in water systems development, especially irrigated agriculture. Additionally, the cost of water services needs to be reasonable enough and linked to the amount of water consumed to encourage conservation. This paper illustrates criteria for equitable cost sharing, which include economic justification, efficiency and equity as well as users' acceptance. Elements of agricultural water pricing are also discussed. These elements comprise: the cost of water services, which is the total cost associated with irrigated agricultural systems development; the value of water, which reflects water's economic, social, environmental, cultural and religious values in the society; and the cost recovery mechanisms, which are the organizational and administrative measures to implement agreed upon policies to value water and services and make the collections.     

Groundwater Demand Management in the Great Lakes Basin—Directions for New Policies

Demand-side management should be used to maximize the efficiency of groundwater use. Implementation of conservation measures would decrease the volume of water use and also exert less pressure on the water distribution system as well as the wastewater treatment system. Allocation of ground water in the Great Lakes basin must conform to priorities established at the community level. Groundwater pricing should reflect the full costs arising from ground water use. A differential pricing structure would help conserve water in the residential and industrial sectors. A user-friendly database on ground water use, quality and quantity for the entire Great Lakes basin is also essential. New policies for sustainable groundwater allocation, regulating water prices for water conservation, conservation education, pollution prevention, recycling and reuse of water as well as effective information management provide new directions for managing the groundwater demand in the Great Lakes basin.     

Modelling Sectorally Differentiated Water Prices - Water Preservation and Welfare Gains Through Price Reform?

This study simulates the economy-wide effects of introducing new water pricing systems in Israel. A Computable General Equilibrium (CGE) model, STAGE_W, is used that includes multiple water commodities produced from different water resources. The current water pricing scheme supplies potable water to municipalities at fees above the supply costs and subsidizes water delivered to the agricultural and the manufacturing sectors. Due to limited freshwater resources, climate change and population growth, water scarcity is an increasing problem in Israel. Therefore, pricing systems which lead to a more efficient allocation of water are intensely debated. This study analyzes two alternative pricing schemes under discussion in Israel: price liberalization, which unifies the prices for all potable water consumers at cost recovery rates, and marginal pricing that lifts the potable water price to the cost of desalination. Both schemes reduce water demand with limited economic costs. Price liberalization is the more favourable option from a national welfare perspective, while marginal pricing allows for larger water savings and, in the long run, independence from fresh water resources.     

寻乌县农业水价综合改革探索与实践

推进农业水价综合改革,是提升水资源配置效率、提高水资源承载能力的有效途径,是利用价格杠杆促进绿色发展、将生态环境成本纳入经济运行成本的重要举措。在江西省农业水价综合改革实践中,各地立足现实,因地制宜,积极探索,涌现出一批形式多样的管护经验模式。本文通过寻乌县农业水价综合改革现状分析,提出了农业水价改革的有效措施和机制,实现农田水利工程维养有主体、经费有保障、责任落到地目标,可为类似项目提供参考。     

Estimating the Impact of Water Pricing on Water Use Efficiency in Semi-arid Cropping System: An Application of Probabilistically Constrained Nonparametric Efficiency Analysis

By introducing proper pricing instruments, farm level water can be used more efficient. But it demands a proper estimation strategy to analyse the efficiency and the input use behavior of farms under the new pricing system. As most production relationships are stochastic in nature, excluding random errors and noise from model specifications often leads to criticism. By using a probabilistically constrained programming formulation, an empirical estimation of stochastic data envelopment analysis (DEA) is done to analyze the efficiency of irrigation water use in the agricultural production system in the Krishna river basin, India. The results illustrate that water demand is higher for farms at, or close to the frontier and lower for those with low efficiency levels. In a second step, a simulation model is developed by using the frontier and economic efficiency derived from stochastic DEA to analyse the impact of water pricing on water use efficiency and water use behaviour. It is shown that an increase in the water price would not cause sizeable profit loss, if the pricing system is administered on a volumetric basis, but water demand would decrease substantially.     

Factors Driving Water Utility Rate Structure Choice: Evidence from Four Southern U.S. States

Water utilities typically set residential water prices using one of three rate structures: increasing block rate (IBR), uniform rate (UR), or decreasing block rate (DBR). Historically, DBR has been the most widely used residential rate structure, but water utilities are increasingly switching to a UR or IBR structure. The literature suggests several possible motivations for rate structure decisions, but provides little empirical evidence to support these suggestions and largely ignores the role of water managers?? attitudes and perceptions in the rate structure decision. The objective of this study is to statistically assess factors that drive rate structure changes, specifically toward UR or IBR, in the southern US. We designed and implemented a survey of water utility managers in Arkansas, Florida, Oklahoma, and Tennessee, including rural to urban water utilities. Survey questions were selected based on water utility manager input and literature review and included rate structure changes, system characteristics, and attitudes and perceptions about factors likely to influence rate structure changes. The rate structure adoption decision is modeled using both multinomial logit and Heckman probit specifications. Our results suggest that different factors drive the adoption of UR and IBR, including fair prices for end-users, qualifying for government grants/loans, revenue concerns, treatment cost increases, and infrastructure investment needs.     

Water Price Reforms in China: Policy-Making and Implementation

Following the conviction that economic and pricing approaches are an essential addition to conventional command-and-control environmental regulation, China has gradually increased attention to, research on and experiments with the application of economic instruments in urban water management over the past two decades. This paper analyzes the actual application and implementation of economic instruments in Chinese urban water sectors, applying an ecological modernization perspective. Water tariffs in China have increased sharply over this period, increasingly representing full costs and increasing water use efficiency. But implementation of water tariffs does run into problems of unclear responsibilities, poor collection rates and institutional capacities. It is concluded that Chinese style ecological modernization should pay more attention to the institutional dimensions of natural resource pricing policies, if it is to profit from the theoretical advantages of economic approaches in urban water management.     

Outsourcing and Efficiency in the Management of Rural Water Services

Rural areas are finding it increasingly difficult to manage water services for household purposes. Local governments cannot afford the high investment and maintenance costs the service entails, leading many rural towns in Spain to outsource the service. Doing so enables local governments to balance their budgets and professionalise management in response to the more exacting requirements imposed by European water regulations. In Spain it is possible to outsource the management of the water service to a public, private or public-private company. This research applies Data Envelopment Analysis (DEA) to a sample of 80 rural water utilities in Southern Spain in order to compare the efficiency of these three forms of management. Despite initially finding that private companies and public-private partnerships are more efficient than public companies, no differences in efficiency can be observed between the three forms of management when environmental variables are taken into consideration. Results show that public-private partnerships are no less efficient than fully private or fully public companies.     

基于WSR—巴拉特方法的TOT水电项目融资定价

通过引入WSR（物理—事理—人理）理论对TOT水利水电项目案例进行定性分析,以三维模型的形式对水利水电项目所涉及的内容进行总结同时确定三个维度的边界条件,再运用巴拉特模型进行一次性资产定价,得出TOT项目的特许经营价格,并以灰色关联分析方法对资产定价过程中的影响因素进行分析。最终得出各指标的关联系数,由大到小排序依次为年经营成本、企业利润、经济增长率、水资源开发利用率和政策变动率,从而为确定项目的定价及其定价过程中的影响因素提供有效的参考。     

Development and verification of a general approach to describe the efficiency of vortex separators in combined sewer systems.

The water framework directive (CEC, 2000) asks for cost-effective measures for achieving good ecological conditions in receiving waters. Because of low operation costs and good pollutant removal efficiency, vortex separators (VS) are an attractive alternative to traditional stormwater tanks. The German design standard for CSO structures, ATV-A 128 (1992), demands long-term pollution load simulations. Today's simulation software, however, considers the removal processes in CSO structures either very rudimentarily or not at all. The higher pollutant removal efficiency of a structure like a VS cannot be taken into account. This might be one reason why VS are used still comparatively scarcely. A mathematical model describing the removal efficiency could increase the acceptance of VS. Several functions describing the removal efficiency have been derived from model tests or large-scale studies within the last few years. Within this paper, the data from three large-scale studies are used to verify the general applicability of one steady-state and one dynamic approach. The results show that the complex processes involved with CSO facilities and the large error related to monitoring make the validation of models a difficult task. Anyhow, especially the dynamic approach was applicable at all considered facilities.     

Estimating the Potential Impacts of Irrigation Water Pricing Using Multicriteria Decision Making Modelling. An Application to Northern Greece

A great challenge of the current European water policy is the implementation of volumetric water pricing in the agricultural sector, especially of Mediterranean countries, where irrigation is a necessary precondition of agricultural production and farmers’ income, but also the major consumer of water. The overall aim of the present work is to develop a methodology that will be suitable for the estimation of the potential environmental, economic and social impacts of irrigation water pricing. For this purpose, Multi-Attribute Utility Theory is implemented in order to simulate agricultural decision making at various water pricing scenarios. Water demand functions are then elicited, by means of the best crop and water allocation (farmers’ decisions) in each scenario. The European Water Framework Directive recommends that any issue concerning water resources management (including water pricing policies) should be developed at the river basin level. In this framework, a cluster analysis is performed to partition the river basin area (namely, Loudias River Basin, located in Northern Greece) into a small number of homogeneous sub-regions. The differential impact of water pricing in each region is then analyzed, and finally, an average water demand function is formulated for the whole river basin.