A note on water services cost recovery in the Gallego river basin

Up to date, water management in Spain has been focused on supply approaches, with the result of providing consumers with this resource at a low price. Developments in the institutional framework regulating water management in the European context (mainly the implementation of the Water Framework Directive) have shifted this approach in order to promote sustainable water use. To achieve this objective, tariff policy must now take into account the water services cost-recovery principle for its different uses. Within this context, this paper estimates the public capital stock related to water supply and assesses the existing level of cost-recovery related to that stock. The methodology used, compares the tax level needed for full-cost recovery with actual revenues from different water-related taxes. The case study area is Gallego River basin in Aragon, and results show the low cost-recovery level for most water services.