Water Pricing and Cost Recovery in Water Services in Portugal

The European water directive forced the Member States to rethink the regulation of water services. Water pricing is now guided by the cost recovery principle. The costs to take into account are manly the environmental and resource costs, but also the financial ones. Portugal was no exception. The evolution from a heavily subsidized activity to a business bound by the polluter pays principle required fast changes and a somewhat difficult adaptation both of economic agents and households.