Water pricing: a basic tool for water sustainability ?

Recent European legislation adopts the concept of full-cost recovery (FCR) as sector in the water economy. In this meaning, FCR is functional to privatization policies and to the guiding line for pricing of water services. In this paper, the meaning of the FCR concept is the gradual retirement of the welfare state from the water sector: the money of taxpayers would analyzed and the economic rationale for its application is discussed. The basic idea developed is then be spent in other public policies, less “mature” and demanding. To put it in other words, this that FCR is a misleading concept, since costs are by definition recovered, and the problem is to purpose of FCR has more to do with politics than economics. assess how it is covered. After presenting the various options available for cross-subsidization, In turn, the “egalitarian” perspective is more concerned on the issue of price affordability and an accounting framework for analyzing the structure of cost recovery of water services is is in generally quite suspicious with respect to water pricing in general, and cost-recovery in proposed. Alternative ways of financing the service are listed according to their di stance from particular. It sees water basically as an essential resource to be guaranteed to everyone the pure long run marginal cost, representing the theoretically optimum, though often practically regardless the economic condition. Water is seen as a source of socially relevant environmental unfeasible solution.