- Tariffssearch for term
Tariffs or charges raise revenues for water services and are necessary for the operation and development of water supply and wastewater services. They also help to underline to users that water is a valuable resource. The most common kind of water charge is a flat-rate charge based on property values. The flat-rate charge has the benefits of certainty over the level of revenue and ease of administration and collection. Its major disadvantage is that charges are not related to the actual level of consumption. Thus this kind of charge cannot serve any economic purpose. Once the annual charge is paid, water becomes free, hence users have no incentive to restrain their consumption. The alternative to flat rate charges is volumetric charges, which vary according to the amount of water consumed (see also Metering). Most volumetric tariffs are of the two-part kind, with both fixed and varying elements. Some systems entitle the user to a free allowance of water for basic household needs, before volumetric charges begin to apply. Seasonal tariffs impose surcharges on water consumed at times of the year when it is scarcer and more costly to supply. In emergencies, such as drought, water may be rationed, or certain uses to be prohibited. Different systems of tariffs are needed for irrigation; industrial water usage; and for waste and wastewater removal and treatment when this is not automatically coupled to water supply.
Further information: Pricing of Water Services, OECD, 1987.