Literature Overview of Utility Regulation: Water Pricing Models in Europe



Year of publication 2020
Type Article in Proceedings
Conference Proceedings of the International Scientific Conference Economic and Social Policy: Economic and Social Challenges for European Economy
MU Faculty or unit

Faculty of Economics and Administration

Keywords cap regulation; cost-of-service; rationales; water pricing; water regulation
Description Water issues are drawing major attention concentrating on water scarcity and water regulation. Water pricing regulation may serve as a one-of-a-kind multi-dimensional tool to achieve an effective demand-supply equilibrium in the context of natural monopoly while incorporating the water scarcity and water stress factors and motivating the innovative approach to water management. Thus, the aim of the paper is to provide a comprehensive literature overview of water pricing models and their rationales and to establish their ordered systematisation. Besides, the aim is extended to classify and to qualitatively assess (with respect to the rationales) water pricing regulation approaches of the selected member states of the European Union and the United Kingdom (England and Wales). Three common elements of the applied approaches/models were identified in the selected states: (1st) the hybrid model application, (2nd) the cost recovery principle and (3rd) the importance of water affordability. Extensive heterogeneity of models defends the general conclusion about the assessment of the model suitability in the context of the individual country environment. Still, the obsolescence of traditional cost-of-service regulation is detected as well as the importance of national characteristics to water pricing model success.
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