Modelling Municipal Water Pricing

Abstract

Suitable price for water is very important both for the waterworks and consumers. Water price should be based on the cost of supply and town location. By means of the value of water on the costs of its provision we obtain a more rational consumption of water. The process of water production requires large capital investments and has serious health implications for the community. In Poland during previous economic system water was very cheap and was overused. The decrease of water consumption after transition to market economy lead to significant water price increase. We present a model, which shows that water price increase will be convergent process.