Increasing block rate tariffs and water conservation : a case study of individually metered dwellings in multi-storey buildings in the Federal District, Brazil

A great deal of economic research has been carried out over pricing policies as a mechanism for managing urban water consumption. In Brazil, water tariffs are structured using increasing block rates that assign an escalating value to aggregate volumes of water use. Such increasing block rate structure subsidises low water costs for small-volume users by charging high water costs for large-volume users. In one way, higher block tariffs would serve as an incentive for water conservation in the household. However, the same can not be said for low-end consumers that use less than 10m³/month, because even if the consumption is less than 10 m³, this will always be the minimum amount to be paid. Since 2005, residential multi-storey buildings are obliged to install a water meter per dwelling unit. In one hand, individual water metering per dwelling is capable of promoting fair charging over domestic consumption. On the other hand, if a series of individual dwellings in multi-storey buildings use less than 10m³/month, they are not encouraged to use water rationally, because such pricing policy charges a minimum budget destined to public system maintenance. In addition, a residue is taxed on the individual consumption, which before the individualization did not. With this question in mind, this paper sets out to explore whether there was an increase tariffs, block rates individually calibrated multi-storey buildings in the Federal District, Brazil. For this, it was selected 12 buildings for an initial pilot project. The assumption adopted was that they all belonged to the same income level (high), but they had very different consumption patterns among themselves. We analyzed 36 months (June 2013 to May 2016). Soon after, there was the confrontation of the general water meter (total and apportionment) versus the individual sum of (total and average of the individual). Recalling the minimum consumption adjustment and that the difference found between the volume measured by the overall water meter and the sum of the volumes measured in individual water meters will be billed or, in the case of a negative difference, offset the inclusion of a water meter that meets the common area of the condominium. The rates were obtained bringing the average present value (May 2016). The aim of the study was therefore to examine whether the current tariff structure of the Federal District goes against the rational use of water policy. The result proved that more than 50% of the buildings the service provider earned higher profit after individualization. It also presented the results for each building, indicating the percentage of user units that pay less and pay more, when compared to the amount that would be paid if it were adopted apportionment. To propose changes to the current policy now, it is suggested the expansion of the study sample so that it is possible to infer the tariff policy promotes (or not) the rational use of water