Design and assessment of an efficient and equitable dynamic urban water tariff. Application to the city of Valencia, Spain

Abstract

Water pricing policies have a large and still relatively untapped potential to foster more efficient management of water resources in scarcity situations. This work contributes a framework for designing equitable, financially stable and economically efficient urban water tariffs. A hydroeconomic simulation model links the marginal value of water, which reflects water scarcity given its competing uses, to water supply reservoir levels. Varying reservoir levels trigger variations in the second block of the proposed twoblock increasing-rate tariff; these variations then reflect water's value at that time. The work contrasts the two-block scarcity tariff with a constant volumetric rate for the city of Valencia, Spain, and the drought-prone Jucar basin, where most of 430,000 households are equipped with smart meters. Results show urban consumption is reduced by 18% in the driest years, lowering basin-wide scarcity costs by 34%.

Promoting Water Conservation: Where to from here?

“…Implementing a dynamic tariff system and using smart meters in Valencia, Spain has provided considerable water savings [79] Up to 18%…”

Applying social influence insights to encourage climate resilient domestic water behavior: Bridging the theory‐practice gap

“…However, one may reasonably expect that such voluntary demand management strategies will be unlikely to generate the same magnitude of effects as those that involve infrastructural or regulatory change. For example, in Valencia, Spain, smart water pricing tariffs (where price changes with water availability) were found to deliver an 18% reduction of total water consumption (Lopez‐Nicolas, Pulido‐Velazquez, Rougé, Harou, & Escriva‐Bou, ) and smart water metering and digital in‐home displays reduced water demand by 7%–10% in Sydney, Australia over an 18‐month trial. In a comprehensive review of different approaches to demand management, Inman and Jeffrey () concluded that moderate reductions could be achieved through voluntary demand management tools but more substantial reductions require large price increases or stringent mandatory policies.…”

Building a System Dynamics Model to Support Water Management: A Case Study of the Semiarid Region in the Brazilian Northeast

“…In this study, a model of price adjustment known as "scarcity-based tariff" (SBT) was presented. This price was based on water supply systems that depend on natural resources influenced by the climate [23]. When water becomes scarce, its marginal value grows and the scarcity price aims to It ought to be reiterated that the adjustment model proposed in this study was not considered for the minimum consumption tariff of up to 10 m 3 since this tariff played a role of equity in accessing water.…”

“…In this study, a model of price adjustment known as "scarcity-based tariff" (SBT) was presented. This price was based on water supply systems that depend on natural resources influenced by the climate [23]. When water becomes scarce, its marginal value grows and the scarcity price aims to reflect this.…”