Water Pricing Allocation: Water 'as Economic-Social Good'

摘要

The use of regular economic theories for water pricing and allocation found to be inappropriate and ineffective. The argument of "Water as an Economic Good" relies on the unique characteristics that give a special classification and economical and social consideration for water to be an Economic-Social Good (Common-Pool Resource). The diversity between water user sectors has different excludability and sub-tractability that ends with different kinds of economic value of water; as public or private good. The character of water does not tolerate with market theory in water allocation between sub-sectors and different water using categories, and as a result, calls for careful allocation of the resource so that its economic value is realized and social benefits are maximized. Several allocation mechanisms are used to consider water as an economic good; marginal cost pricing, allocation by a social planning (public allocation) and allocation by market forces. Economists often call for implementing water markets, which is thought to be an effective instrument to improve water allocation particularly in water scarce situation. On the other hand, non-economists treat water as a basic human need that should be largely expanded from competitive market pricing and allocation. Uncertainty can be reduced and the process of choosing the most beneficial project and policy can be optimized. Pricing definitely means to secure a resource value, Water pricing is recognized to have the potential to mitigate water scarcity to a certain extent. It can provide incentives to water conservation and transfer from low-value to high-value agricultural production. It does not automatically imply that a market price needs to be paid to make the allocation efficient. Water is too bulky (too costly in relation to its price). Increasing block and rate a tariff appears to provide an effective tariff structure to achieve the objective of cost recovery and to maintain the equity of the society. Although tariffs have not been designed, operate and managed well in most developing countries, where a general pricing policy is an increasing-block tariff with a reduced-rate initial block corresponding to basic needs.