Evolution of water tariffs in Spain and present debates Maestu J. in

in

Dupuy B. (ed.).

Aspects économiques de la gestion de l' eau dans le bassin méditerranéen Bari : CIHEAM

Options Méditerranéennes : Série A. Séminaires Méditerranéens; n. 31 1997

pages 437-444

Article available on lin e / Article dispon ible en lign e à l’adresse :

--- http://om.ciheam.org/article.php?ID PD F=CI971555

--- To cite th is article / Pou r citer cet article

--- Maestu J. Evolu tion of water tariffs in Spain an d presen t debates. In : D upuy B. (ed.). Aspects économiques de la gestion de l'eau dans le bassin méditerranéen . Bari : CIHEAM, 1997. p. 437-444 (Options Méditerranéennes : Série A. Séminaires Méditerranéens; n. 31)

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Directorate for Water Quality Secretary State

SUMMARY

-

This paper describes the water funding needs in Spain and the role of water tariffs in a mature water system. It looks at the evolution of the water tariffs from a highly subsidised system designed to increase farmers rents with economic development objectives in mind, to the present compensatory system. It shows how in Spain, under present conditions of water stress, we might be moving beyond, to design a system of tariffs aimed at further improving efficiency in water use.

present some of the debates that are taking place in Spain today around the issue of making water tariffs part of a water savings strategy. These debates range from the economists views about marginal cost pricing and the liberalization of water markets, to those who see that water is not only an economic resource and argue that private appropriation of water has led to the displacement of natural communities and other non economic uses. In between these views we find useful ideas about how the effectiveness of pricing is linked to the existence of institutional and technological preconditions. Each of these raises some important considerations, specially for arid and semi arid countries.

this want to give a of

the in Spain

in the context of system and pollution.

then some of the debates in Spain about and

expenses. will talk about

of economists about the

ing and the to

tionalise also the views of those

that the

is not only

has led to the dis-

placement of non

economic uses.

sis about the consequences of to

43 8

how the effectiveness to the existence of insti-

hope to this discussion

that may be useful to

of Water in Semi-Arid Countries and the Cost of

in Spain as in

An of

to the

the need to the

Thanks to

a of

to the public the development of

of many of the

been possible thanks to is some

to We

lion of

24,250 of (80% of total final

to 20% in

fiom to in

has became a the

not only to maintain and manage but to

in the been

calculated to

Building new capacity and the clean water bill

ments in the next 33,000 and

of of

213 would be invested by the of

new new

An of the clean bill is invest-

ments in

by

is now polluting and limiting access to of

have an

contaminants

toxic to on health

withstanding the effect on of in an

1

We in of

of

A high in

alone has been valued at

OF TAFUFFS

The Tariffs By

in paid by of the

ity of

- the of

16 of

is to the

of

two of

-

of

pts m3 (an $750

to 30%

in the final bill the

-

the

to the

in 1 pts $60

at the and how they applied. They

not only the need in

with

The types of tarìjjfs

The is

two to compensate the

The regulation tanfi (or regulation tax,) and the Tarzfl for water use which the

to

4% of the initial investment

in 50 specific in 25

)

ceptually this is like a

nity costs of public money if it had been lent to

a 4% is ap-

plied, example, in

to 60% in of the 250

million that it cost when it was built which has been actualized to 500 million

a to

used to be calculated on the basis of past

Today it is calculated using the budget of the is then divided among us-

on the basis of by

volume in new is

the the

basis of a allocation of

often subject of debate.

and the

The final to

cases such as the one in of we wllisee The public system of in place today has

meant away, in with the

highly subsidized system. Subsidies used to 60% to 100% of with a 1.5% in-

on a loan to the

investment needs, if any. This to a system

two

-

use of the

is 4% of the value of the

land used and it to

companies, etc.. that use the in the

-

to

mental costs. it is calculated each municipal sanitation sys-

tem) multiplying the a

coefficient

tics of the its level

to be imposed on the basis of the pollution content of the dis-

the

been paying

to be too difficult

to apply the pays to

A is by using incentives.

to minimum

be the imposition of taxes and

pesticides and taking away existing subsidies.

440

from targfs is insufficient for paying the clean water bill.

The total the have

been 1

,

189 million in 8 but the

Annually this has million

The income is insufficient to an-

nual bill of

million including the costs of

This is explained, in because the compensa- of the existing system means that only pay those benefited by

example, that as much as

50% of the exempted

paying, sometimes because so

a system based on a Confed- it

tend to be delayed and included in the investment budget as

Towards a recognition of water an important economic and environmental resource. The national hydrological plan

The investment needs in the National expendi-

a ent system. addition saving has be-

came a can

in this. Changes in studied in

(1993) move a step the debate :

- A all so that

body pay the costs of

ing, of the

public domain.

-

addition, as today, those that benefit ~ o m that

quality should as it is designed in the

-

coefficients

ON

is a consensus that

of in will be

would signals to all about the

city, savings and help

loses. Some of the "socially"

city of then

in Adding to this

will be able to will

to loses.

An the debates in Spain have been

about what should be the extent of the

the level should be set at an economic at

a social the institutional and

technological to have the

The lasted now

that debates about have

jumped the

institutions, to the pages of the has became in this sense an open political and social debate.

.. .

Some of the questions in

discussed headings:

Should water be allocated by treating it an economic resource, attempting to achieve art economic optimum or should it be allocated according to social objectives?

The market view

Economists, (often not specialist in in Spain) that allocation

efficient based on look

.at been funded

funds, and 80% of available

is used in at low and in

many cases with low is obvious to them that a which only to 5% of the

in a not need to be subsidised. scandalises them that

obtain economic a

to cost,

a

this that the possi-

bilities in is lim-

ited so, in to

to im- in

to explain the usefulness of the system. Examples such as that in

sell and the

sell to

etc.

(P.

example quoted is the the

of

(thanks to the in

technology) to a it to

to to the

ductivity in

to the in-

fluential claims about the need to and let

of to so-

fiom

of national to

Today these focus on the need to con- the the insufficient: "The non ac- a footnote as in many calculations of costsll

p.

they that not be seen

only as an

the loss

functions of a loss to of

to talk about when the in some cases the

is not

ploitation leading to salinization of this

context the of and the deci-

sions about use and allocation should be made to the law because the competition between the economic uses and the

activities that need

is a social asset and not only an economic asset, and the state defines its sustainable use to its maintenance as a

that the idea of an economic optimum is

a fallacy and that optimums ac-

to institutional systems. They

the in Spain in the Ca-

to say that must exist and they use the same ex-

in Spain to con- clude that exploitation and salinization of aq-

this

to signal the value of the

should not be excessively complicated because the of

will only happen if substantially and this is not

1987 saving is

possible "institutional the

question is to have that

compatible with sustainable development.

debates focus on whether prices should be increased to better re- flect social costs of the resource or is it impor- tant to deal with some questions raised about the ability of farmers to pay and the impact of creased tariff,, on irrigation farming.

These in Spain

of uses 24.250 cubic of

This is total uses. The land

is million (15% of the total) and than 50% of the total final

442

a disadvantage ability to in Spain is only 10% of total whiles in the of

is like 40%. This means that non

in (with

of 800 mm) have yields to those of in Spain. The possibility of competition obviously depends on

looking at

seems to in

because the total to-

141 million is only be- tween l and 2% of total income.

do hide an That is that some

a high and

to

in 1

,

184 million in

consumed annually has been

uted to be in a to is

8% of total income fiom (with

it adds up to 10%). Combining

of it is

how in i s

Some sensibility analyses have been done about the

of levels

of (50% subsidy and 1.5% 40%

subsidy and and no subsidy and 4%

and including the of ele- vation (Sumpsi Viñas, 1994).

and oleaginous will fmd it difficult to

and this will affect in Castilla Leon (with 60% of the total dedicated to these The ability of

h i t and vegetables to

will depend on the evolution of the in the

of in

will This is the case in

in Spain, An-

dalucia, and which is in

(cotton, beet and tobacco) might fmd it to cope with

The conclusions of of

is not an

is in in

that in

to

subsidised in the past.

Some professionals challenge the assumption of water prices per se bringing about greater effi- ciency. They do so through mainly empirical studies which draw lessons about technical and institutional prerequisites to change water usage and allocation.

The case of Almeria

in

in 1982 to 5,500 today.

This this, in

in spite of the in evapo-

100 mm.

addition the quality of soil is

as

Spain with high efficiency in as discussed.

than

23,000 of plastic in

tages. The wind ventilates the soils

a to have flexibility

of application. To do this

cation. This is a system which is intensive in capital 23,000

expensive to m.

they pay 16 pts m3 to the

(this This is put

meant two annual of wa- 5% of the total income

the local to

efficiency.

There are some lessons drawn from this type of success stories:

1. The existence of efficient funding mechanisms

to low

no the the ba-

to follow up the use of the in- is

2.

tant in

The fi-

be at least equal to the costs associated in obtain-

ing to

and Lopez Galvez, 1994; Losada Villasante,

the basis of the

is (8,870 than in

two the lat-

in al, 1993).

4. not easy to

ity systems make it difficult to changes in

cussed in supplied to the

to on

in

to

usage and the technology used of the

tives to

5. Technology has a lot to do with

that give fieedom

and flexibility to that

is supplied today to gation systems make little the They impose a logic of infiequent, discontinu-

The use of in

to

flow was possible thanks to the

it to

hope to have shown how in

away fiom a highly subsidized system, designed set with economic development objectives in mind. The 1985 Law changed to

of

to that those that benefit should pay the full cost of

Avoiding social unbalances and smoothing the in

sulted in newly built

how to-

the to

make it not

in saving

flected in the

not only to those benefited by public to be cautious in the application of new

444 J.

can be

might be technical and institutional to them having the

this context

than a 1,000 in Spain because the 1866

law that to

in of policy.

have discussed some special of Spain as

debates have helped me to that in and semi the choice of funding mecha- nisms and the of

and in cases consequences than in spite of an

ingly influential wave it

might be difficult to think of as a suf- ficient in this type of climate. calls a subtle use of to both efficient eco- nomic use of and avoid

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