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Water pricing is the process of assigning a price to water on the basis of what the market can bear, availability, and other concerns. This includes everything from pricing bulk water sales contracts to making decisions about how to price water for delivery to consumers in a given municipality. It is part of the larger body of work surrounding water policy, which includes environmental, economic, and social issues. Authorities may also need to consider legal restrictions, like laws that mandate affordability of basic resources like water.
One determining factor in water pricing is how much water can fetch on the open market. In a developed nation, demand for water may be high, and consumers have money to pay high prices. Water agencies can price water for delivery, including bottled water as well as municipal water supplies, accordingly higher. Conversely, in the developing world, demand for water may be present but consumers do not have purchasing power and may turn to alternate, potentially unsafe sources of water if the price is too high.
It is possible to use water pricing to control water markets. A city may price water artificially high to promote conservation. Consumers will limit water consumption to keep their bills low, and this will reduce the strain on a water system. Consumers who do not or cannot conserve will have to pay a premium, and the penalties they pay can go to activities like trucking in water or developing new sources of water for the region. Cities may also charge a fee for exceeding baseline usage for the same reason. As long as consumers hit an average, their rates will be low, but once they start using more than similar households or businesses, their water bills will go up.
Bulk water pricing can be slightly different. Communities can sell water in bulk to manufacturers who use it in industrial processes as well as companies that bottle and sell water. Bulk prices tend to be lower than those for consumers, but the community still wants to get a good deal for its water. It may consider the need, competing prices from other suppliers, and what kinds of activities it wants to fund with the sale. Bulk sales may help pay for infrastructure improvement and other necessities, and communities may need to be able to justify the sale to citizens, so they must come up with a fair pricing scheme.
The process of water pricing can involve a variety of officials as well as representatives of water agencies and companies that buy and sell water. Pricing needs to include considerations like the cost of storing and transporting water. Expenses associated with water treatment may also be a cause for concern.
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