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USER PAYS WATER PRICING SENSITIVITY AND ADOPTION INCENTIVES

IWRA World Water Congress 2003 Madrid Spain
IWRA WWC2003 - default topic
Author(s): Chris HUNT

Chris HUNT, UQ Business School, University of Queensland



Keyword(s): Urban water services, Pricing policies, Agency Theory, Transaction Cost Theory
Article:

Abstract

This study empirically examines the reasons for the slow adoption, even after the provision of incentives, of the most significant water resource and water services provisioning management initiative for urban water entities, user pays pricing policy. This is an exploratory study given that no empirical studies, particularly from an accounting perspective have been undertaken of this issue. Given anecdotal claims about water resource and water pricing political sensitivity, in this study, a combined Agency and Transaction Cost theoretical framework is used to develop the study empirical model that is tested using data from the Queensland urban water industry. In the development of the model the supply side focus of pricing policy and incentives is identified. This supply side focus has failed to recognize demand side political sensitivity driven by the economic transfer of wealth away from an urban water entity and its stakeholders due to the user pays pricing model. The study findings
support anecdotal claims of political sensitivity and identify a number issues requiring consideration in remedying the supply/demand imbalance implications for adoption incentives and slow adoption of the user pays pricing model by urban water entities. The study findings are of interest to regulators, policy makers, managers, users and other stakeholders.

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