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Water Pricing in Spain: Following the Footsteps of Somber Climate Change Projections

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Book cover Water Pricing Experiences and Innovations

Part of the book series: Global Issues in Water Policy ((GLOB,volume 9))

Abstract

As many other countries, Spain has to cope with, and be prepared to address, major water challenges: climate change, growing demand, and water pollution. Climate change projections indicate significant reductions of runoff and water recharge and more unstable climate regimes. Improving water allocation has become an urgent need. Water demand management is now one of the most relevant issues in the Spanish water policy agenda. The chapter discusses the controversial topic of water pricing, focusing on Spain. The Water Framework Directive (WFD) foresees that, in order to ensure an efficient and sustainable management of water resources, prices should be fixed according to the principle of cost recovery. But our analysis of all policy-relevant drivers and likely scenarios suggests that reforming water-pricing policies is likely to face numerous obstacles and to raise strong opposition from most water users. And yet, pricing policies in Spain are already innovative and fully implemented for all sectors. So the way to reform is already paved, and we expect that more progress will be made in next WFD planning period (2015–2020).

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Notes

  1. 1.

    European Union’s Structural and Investment funds finance actions targeted at economic development. There are five funds, namely, the Cohesion Fund, the European Regional Development Fund, the European Social Fund, the European Agricultural Fund for Rural Development, and the European Maritime and Fisheries Fund. Support from these funds depends on the level of economic development. However, only the less-developed regions (one in the case of Spain) can receive support from the first one.

  2. 2.

    The 2013 yearly average Euro/US$ exchange rate was 0.783 Euros per US dollar, i.e., 1.277 US dollars per Euro, according to data from the US Internal Revenue Service (http://www.irs.gov).

  3. 3.

    Data from the Spanish National Statistics Institute (http://www.ine.es).

  4. 4.

    Current tariffs for raw water from the Tajo-Segura Transfer are 0.098445 €/m3 for agricultural users and 0.115768 €/m3 for urban users.

  5. 5.

    The index is calculated dividing the total revenues from water services by the distributed water volume.

  6. 6.

    AEAS is a nonprofit professional association that integrates large groups of public and private operators of the Spanish water supply service. For residential users, the formula to calculate the average price is the following: (0.15*P7) + (0.75*P15) + (0.10*P25), where P7, P15 and P25 are water bills corresponding to 7, 15, and 25 m3 per month, respectively. In the case of industrial users, the average is not weighted, using the following formula: (P10 + P150 + P1,500)/3. In a similar way, P10, P150, and P1,500 are water bills corresponding to 10, 150, and 1,500 m3 per month, respectively.

  7. 7.

    In this respect, two different types of policies can be used: income-support policies and tariff-related policies. Income-support policies focus on the income side when attempting to solve the consumers’ affordability problem. In this group, it is posible to consider direct income aid or water service vouchers from the public sector, water utilities or other private or charitable sources, payment aids in the form of easier payment plans, special loan facilities, and arrears forgiveness. On the other hand, tariff-related initiatives consist of changing water charges (level and structure) in order to reduce the size of the typical water bill faced by low-income users. We include, among other measures, subsidizing utility prices, designing tariff structures (“social tariffs”) to get cross subsidization, or capping metered tariffs for low-income users (OECD 2003).

  8. 8.

    Those figures have been taken from different river basin websites: www.chcantabrico.es (Cantábrico); www.chduero.es (Duero); www.chebro.es (Ebro); www.chguadalquivir.es (Guadalquivir); www.chguadiana.es (Guadiana); www.chtajo.es (Tajo).

  9. 9.

    This tariff is applied in the Madrid region, in those municipalities supplied by the Canal de Isabel II water company.

  10. 10.

    For the supply service to residential users, the price of the third block is 1.979 and 1.319 for the summer and the rest of the year, respectively.

  11. 11.

    Or drafts, when final plans are not yet available.

  12. 12.

    The Plan Renove is a subsidy program launched in Spain as part of the 2005–2007 Energy Saving and Efficiency Action Plan and was followed by a second wave of subsidies in 2008–2012. Its primary purpose was to provide financial incentives to households to replace some electrical appliances (fridges, freezers, washing machines, dishwashers, etc.) by others with a class A or A+ or A++ label. The subsidy was aimed at compensating for the price differential between the conventional appliance and the efficient one. The level of the subsidy, which was determined by each autonomous region (or autonomous community, AC), varied from 85 to 125 euros, depending on the appliances.

  13. 13.

    Cross compliance: A mechanism that ties direct payments to farmers and a number of rural development payments to compliance with a series of legislative acts relating to the environment, food safety, animal and plant health, and animal welfare and to maintaining agricultural land in good agricultural and environmental condition (GAEC). Cross-compliance rules relate to 18 statutory management requirements and 15 GAEC standards. Noncompliance with these standards and requirements can lead to a reduction in CAP payments to the farmer.

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Authors and Affiliations

  1. Escuela Técnica Superior de Ingeniería Agronómica, Universidad Politécnica de Cartagena, Paseo Alfonso XIII, 48, 30203, Cartagena, Spain

    Javier Calatrava

  2. Facultad de Economía y Empresa, Departamento de Economía, Universidad de Oviedo, Avda. del Cristo s/n, 33007, Oviedo, Spain

    Marian García-Valiñas

  3. ETS Ingenieros Agrónomos, Avenida Complutense 3, 28040, Madrid, Spain

    Alberto Garrido

  4. Departamento de Economía Aplicada, Facultad de Ciencias Políticas y Sociología, Universidad de Granada, C/ Rector López Argüeta s/n, 18071, Granada, Spain

    Francisco González-Gómez

Authors
  1. Javier Calatrava
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  2. Marian García-Valiñas
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  3. Alberto Garrido
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  4. Francisco González-Gómez
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Correspondence to Javier Calatrava .

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Editors and Affiliations

  1. School of Public Policy, University of California, Riverside, California, USA

    Ariel Dinar

  2. Víctor Pochat Consulting, Buenos Aires, Argentina

    Víctor Pochat

  3. Department of Agricultural Economics, Agrifood Research and Technology Centre CITA-DGA, Zaragoza, Spain

    José Albiac-Murillo

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Calatrava, J., García-Valiñas, M., Garrido, A., González-Gómez, F. (2015). Water Pricing in Spain: Following the Footsteps of Somber Climate Change Projections. In: Dinar, A., Pochat, V., Albiac-Murillo, J. (eds) Water Pricing Experiences and Innovations. Global Issues in Water Policy, vol 9. Springer, Cham. https://doi.org/10.1007/978-3-319-16465-6_16

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