Role of Pricing System in Optimising Water Use: Case Study Croatia

The paper examines role of pricing system in optimising water use based on Croatian case study.

First, main drivers of water demand are identified. Next, impact of pricing system on demand and investment decisions are  examined. This is followed by analysis of existing pricing models and full application of user and polluter pays principles and the role of  price in  balancing demand and supply, fostering efficient investments, enabling cost recovery and compliance with affordability criteria. Finally, conclusions and recommendations are provided.

Scenario analysis shows that changes in the economic structure are likely to be the main driver of changes in water use and that full implementation of the user pays principle and  application of seasonal and block pricing could help alleviating problems related to water quality/scarcity. On the supply side, establishment of operational standard for water utilities and development of  financing instruments to achieve minimal standards are necessary.