A residential water demand equation is estimated using a panel data sample of 5Portuguese local communities and 72 months, corresponding to a total number of 360 observations. Because of the presence of multi-part tariffs, we use as explanatory variables the two common price-related variables: marginal price and difference. To prevent the simultaneity bias from using observed quantities to determine the values of marginal price and difference directly from the rate schedule, we use an instrumental variable approach to create a constant marginal price and difference parameters for each rate structure.The price elasticity value obtained fall within the range of those found in other case studies. Thus, although presenting weak elasticity, price seems to play a role in water demand management. However, we do not confirm the expected influence of difference on residential water demand. This can be a consequence of the complexity of the Portuguese water tariffs and the confusing signs that come from the simultaneous use of fixed quotas and increasing block tariffs. So, it is imperative to clarify water tariffs objectives by reviewing the Portuguese water tariffs design processes.

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In the European Union, water supply services are referred to as 'services of general interest', meaning that they are subject to multiple, potentially conflicting, public service obligations. This paper considers empirical data for Portuguese municipalities and provides a comprehensive approach to assessing the social dimension hy evaluating whether the concerns of universal access to water services for hasic needs, affordability and equity are embodied in the corresponding water supply tariffs. Accordingly, 'essential minimum quantities' (EMQs) of water for representative households are calculated and then compared with the lowest tariff block's upper limit, by water utility. Next, charges underlying the EMQs are calculated and compared with the average income of each representative household, by municipality. The results show that, in general, the EMQs are enclosed in the first block of consumption and also that the corresponding water charges do not represent a disproportionate burden on average household size and income. Nonetheless, our findings indicate that, when considering the 20% poorest households, the water charges raise affordability concerns in an important number of municipalities. Further, the results show that there is a socio-economic inequity that favours the better-off households.

There is a consensus that the emphasis on the management of water resources should be put on demand side policies. However, some questions remain to be solved on the supply side, which are frequently absent from empirical studies based on the estimation of cost functions. This paper aims to fill to some extent this gap in the literature by focusing the consequences of water losses reduction and the management of water resources based on their availability at an integrated river basin level.Major findings indicate that it would be better in terms of costs to maintain some level of water losses than to repair the leaks and suggest advantages from more concentration in the Portuguese water industry. In addition, the costs do not seem to be systematically influenced by the hydrographical regions to which water utilities belong, what might be due to the absence of appropriate cost accounting methods.JEL Classification: L11, L95, Q25

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