Best Practice Pricing Principles Vs. The Politics
Of Water Pricing
Author(s)
B. Cooper, L. Crase & N. Pawsey
Abstract
Government response to water reform in Australia has included a buyback of
water rights and public investments in irrigation infrastructure. In the case of the
latter, a critically important but under-investigated feature of this policy response
is that water users are subsequently not obliged to pay water prices that reflect
the cost of gifted irrigation infrastructure. Thus, whilst considerable progress has
been claimed towards establishing water prices that are cost-reflective, such as
offering tradable water rights, much can still be done to improve the price signals
received by rural and urban water users. This paper investigates the politics of
establishing water charges that are cost reflective. More specifically, we discuss
how political economy can potentially and markedly distort best practice water
pricing. An assessment framework that draws from best practice pricing
principles embodied in the National Water Initiative (NWI), Water Industry
Regulatory Order (WIRO) and the Essential Services Commission (ESC) Act is
used as a framework to consider areas of improvement with special attention
given to arrangements in Victoria. Nonetheless, we argue that the results are
applicable in most jurisdictions and suggest there is considerable scope for
improving the efficiency of water prices.
Keywords: water prices, gifted assets, best practice pricing.
Keywords
water prices, gifted assets, best practice pricing.
Related Book
Other papers in this volume
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