The Ministry of Infrastructure and Water Management commissioned a study on water pricing. The aim is to achieve a 20% water savings. Pricing is seen as one of three policy instruments, alongside influencing behavior through communication, obliging, and regulating.
Research by Witteveen+Bos shows that raising the cost of drinking water has only a “very limited effect” on water demand. For businesses, there is a slightly earlier reaction to price than for households.
The small share of water in the total cost price, the required quality in business operations, and the high investment costs in water-saving technology play a role in the low price elasticity. In case of very steep price increases, although it may lead to more economical use of water, undesirable social effects may also occur.
The researchers realize that greenhouse horticulture has above-average water quality requirements. This makes the use of substitutes for drinking water less obvious. “Per region and crop, it must be determined whether groundwater is a suitable alternative. In practice, problems such as salinization and de-ironing can be encountered.”
The researchers make no judgment on the desirability of water pricing.
View the full study shared with the House of Representatives here (in Dutch).
