The European Environment Agency (EEA) has published a new study “Water management in Europe: price and non-price approaches to water conservation”, based on case studies from 8 countries (Denmark, Spain, France, Italy, Romania, Sweden, Cyprus and Germany).
The first consideration is that the European study, as the title suggests, ignores the Human Right to Water and the modality of concretization of the UN resolution in member State’s.
The second consideration is that the eight countries surveyed all have pricing mechanisms in place to provide an incentive for more efficient water use in the household sector, ranging from simple metering and tariffs based on volume to rising block tariffs.
The results of the case studies in the surveyed countries show that while pricing does affect water consumption, the impacts vary. For example, in the cases of France, Germany and Spain, the results for the household sector suggest that the prices set have a relatively minor effect on the quantity of water demanded (i.e. water demand is inelastic to price). This does not mean that the demand for water in these countries is unresponsive to price. Some examples illustrate that water demand is responsive to income and household size, meaning that water consumption increases more than the increase in income and household size. In Italy, for example, water demand increases by a factor of 1.5 with increasing income. In Italy and France, water demand is also correlated to household size (by a factor of 1.6 and 0.8 respectively).
Overall, it can be observed that the case study results are very diverse and do not allow for a homogeneous interpretation of the overall effects of water pricing in determining demand. The results suggest that on the one hand water demand is not responsive to price changes, but on the other hand, in cases such as Denmark, demand responds to price. This highlights the fact that price elasticity of water demand largely depends on the type of water market in each country.