Systems Analysis Approach to the Design of Efficient Water Pricing Policies under the EU Water Framework Directive

Abstract

American Society of Civil Engineers Riegels, N.; Pulido-Velazquez, M.; Doulgeris, C.; Sturm, V.; Jensen, R.; Moller, F.; BauerGottwein, P. (2013) Under the first approach, all wholesale water users in a river basin face the same volumetric 26 price for water. This water price does not vary in space or in time, and surface water and 27 groundwater are priced at the same rate. Under the second approach, surface water is priced 28 using a volumetric price, while groundwater use is controlled through adjustments to the price of 29 energy, which is assumed to control the cost of groundwater pumping. For both approaches, 30 optimization is used to identify optimal prices, with the objective of maximizing welfare while 31 reducing human water use in order to meet constraints associated with EU WFD ecological and 32 groundwater sustainability objectives. The second pricing policy, in which the energy price is 33 used as a surrogate for a groundwater price, shifts a portion of costs imposed by higher water 34 prices from low value crops to high value crops and from small urban/domestic locations to 35 larger locations. Because growers of low value crops will suffer the most from water price 36 increases, the use of energy costs to control groundwater use offers the advantage of reducing 37 this burden. 38

Hydroeconomic Models as Decision Support Tools for Conjunctive Management of Surface and Groundwater

“…Some studies show that it is possible to increase welfare by using pricing to implement a conjunctive management strategy in which price signals encourage surface water use during wet years and groundwater use during dry years (e.g. Schuck and Green 2002;Riegels et al 2013). In other cases, changes in surface water prices and costs affect the relative value of groundwater, reflecting on pumping patterns, operating costs and groundwater storage.…”

“…Including specific policy investigations (e.g. pricing; Riegels et al 2013) in addition to water allocation assessment will increase as the tools under discussion are used to assess particular policy investigations.…”

Environmental Water Price Based on Water Environment Capacity and Ecological Water Consumption: A Case Study of Hefei

“…According to the ecological environment function of the ecosystem, the ecological environment water consumption can be divided into: river eco-environment water demand, vegetation eco-environment water demand, the ecological water used to protect wetland, urban ecological water demand and the ecological water demand for filling back over exploitation of groundwater [28].…”

Definition of efficient scarcity-based water pricing policies through stochastic programming

“…Not only financial costs should be recovered but also environmental and resource (opportunity) costs. This issue has been addressed through the use of hydro-economic models as tools able to couple physical and economic water resource aspects (Heinz et al, 2007;Riegels et al, 2013;Ward and Pulido-Velazquez, 2008).…”