Mohammad Ali Falahi; Hossein Ansari; Kamran Davari; Narges Salehnia
Volume 13, Issue 38 , April 2009, , Pages 217-242
Abstract
Water is a necessary and scarce good that requires new strategies for allocation and optimal use. we. Water pricing and levying suitable tariffs subject to social welfare maximization are the economic solution to this problem. In this study, we have considered available tariffs in domestic water sector ...
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Water is a necessary and scarce good that requires new strategies for allocation and optimal use. we. Water pricing and levying suitable tariffs subject to social welfare maximization are the economic solution to this problem. In this study, we have considered available tariffs in domestic water sector of the city of Neyshabour. According to current tariff problems, new tariffs are offered by using Ramsey Model with the target of maximization of social welfare. Finally, Ramsey tariffs are modified based on two scenarios. In the first one, we incur less cost to customers with paying a subsidy about 135.5 Rial/m3/year by government. In this scenario, the minimum cost is zero for users with consumption less than 5 m3/month and the maximum cost is 1216 Rial/m3/month for users with consumption more than 30 m3/month. In the second one, losses related to low income group’s paying are compensated by high income users. So, minimum cost is zero for users with consumption less then 5 m3/month, and maximum cost is 1980 Rial/m3/month for users with consumption more than 40 m3/month. In these two scenarios, the water and wastewater company would be in the break even point.
