Basics of Water Pricing and Necessity to Model Municipal Water Pricing

Abstract

The paper presents a brief overview of water pricing changes in the last two decades in Poland and impacts to demand and water price levels. Moreover, a model is proposed relating water price to water sales, production, average cost resumed in a relationship between current and previous period prices. This model results in a price convergence situation where the equilibrium price depends on the above mentioned parameters. Consequences for the water supply system of lower demand are presented.