Tariffs and Cost Recovery in Water Reuse

In water stressed areas, water reuse has been identified as a key component of integral water resource management. However, the economics of water reuse projects are a major barrier for their implementation. The objectives of pricing for water demand management, pricing for encouraging the use of regenerated water, and pricing for cost recovery are not simultaneously achievable. In this paper, the major constraints hindering the implementation of the cost recovery principle in water reuse have been identified. Moreover, a two-part tariff with a combination of a decreasing and increasing rate structure for the variable charge is proposed as a partial solution to improve water reuse pricing. Finally, some policy recommendations from the perspective of integrated water resource management are formulated.