OECD countries move away from water subsidies with spread of metering

A report published by the OECD, The Price of Water: Trends in OECD Countries shows that increased use of metering in OECD countries has led to significant reductions in water subsidies over the last decade.

The report shows there is a growing awareness that recovering the full cost of water infrastructure investments and operations can lead to economic, environmental, and social gains.

Despite considerable variations in price structures and price levels, the report cites evidence that even where subsidies still exist, there is now emphasis on making them more transparent through more focused water pricing practices such as metering.

The report provides country-specific information on water pricing structures and levels. It focuses on the three heaviest water-using sectors – agriculture, industry and households – and reviews recent developments in related areas, such as water subsidies, affordability, and institutional change.

Metering facilities for water services continue to expand. In two-thirds of OECD countries, more than 90% of single-family houses are now metered and some countries, such as France and Germany, are also expanding the use of meters in apartments. Industrial water use is already metered in most countries, while agricultural use is metered in only a few.

Household water supply and sewage disposal prices have generally increased in recent years, and significantly so in a few countries.

Of the 19 countries for which data was available, all but one exhibited real annual increases in water supply prices during this period, and five actually had average annual increases of 6% or more.

In agriculture, on the other hand, water prices remain quite low relative to household and industrial prices, with a few countries not charging at all for irrigation water.

About 23% of fresh water used by industries in OECD countries is drawn from the public system. Higher water prices are increasingly causing industries to consider going ‘off system’ – to find their own water supplies or to treat their own wastewater.

The report also notes the development of several ‘social’ tariff structures that respond to concerns about affordable water supplies. In one area of Belgium, for example, ‘free minimum’ amounts of water to poorer households are based not (as is customary) on the household as a unit, but on the number of people living in that household. This ensures that larger households have access to the water they need, but forces even these households to pay for some of the water they use, implying a greater effort to conserve on that use.