Pricing Water
Water pricing is becoming more widespread, with the dual aim of expanding supply and encouraging more responsible use. Anything scarce and in demand commands a price; this is one of the basic principles of economics. Water is scarce in some contexts (drought, degraded quality), so water pricing is increasingly seen as an acceptable instrument of public policy. Water-use charges, pollution charges, tradable permits for water withdrawals or release of specific pollutants, and fines are all market-based approaches that can contribute to making water more accessible, healthier and more sustainable over the long term. For this reason, OECD countries are working toward the goal of “internalising” the full marginal costs (including environment costs) into decisions that affect water use and water quality.
