Water pricing: economic and social issues

The paper focuses on the evolution of the water regulation, devoting particular attention to the allocation system adopeted in Italy and the way water production costs are shared among consumers. There are several machanisms for water allocation: marginal cost pricing; public/adiministrative allocation; watermarkets; user-based allocation. Most studies posit that no single allocation procedure is optimal for all situations. In Italy, given the characteristics of public and primary good of water resources, the allocation rule follows and administrative approach. The final section of the paper deals with the allocation system used in Italy both at institutional and economiv levels. Then a description of the prevalent pricing methods in the irrigation sector and households is given. The last part of the paper considers the affordability problem of water services