Skip Navigation Links
Journal of Environmental Accounting and Management
António Mendes Lopes (editor), Jiazhong Zhang(editor)
António Mendes Lopes (editor)

University of Porto, Portugal


Jiazhong Zhang (editor)

School of Energy and Power Engineering, Xi'an Jiaotong University, Xi'an, Shaanxi Province 710049, China

Fax: +86 29 82668723 Email:

Scarcity Pricing for Water Demand Management: A Case Study in Campina Grande -- Brazil

Journal of Environmental Accounting and Management 9(1) (2021) 75--91 | DOI:10.5890/JEAM.2021.03.007

Wanderbeg Correia de Araujo$^{1}$ , Karla Patricia O. Esquerre$^{1}$, Oz Sahin$^{2}$, Brenner Biasi S. Silva$^{1}$

$^{1}$ Industrial Engineering Postgraduate Program -- PEI UFBA, Federal University of Bahia, Salvador 40210-630, Bahia, Brazil

$^{2}$ Cities Research Institute and GCCRP Systems Modelling Group, Griffith University, Queensland 4222, Australia

Download Full Text PDF



Despite being still little explored, tariff policies have a large potential to foster more efficient management of water resources, mainly in scarcity regions. Therefore, this paper proposes a model of water scarcity pricing (WSP), based on the storage average monthly data and historical average data of the volume of the reservoir between January 1996 and December 2017, besides the fixation coefficients of adjustments for each operational range and zones of accumulation of reservoir Epit\'{a}cio Pessoa. The simulated results point to an annual percentage of significant reductions in water demand, mainly in years of low levels of water stocks in the reservoir, for example, 8% in the years 1998-2001 and almost 13% for 2016-2017. Moreover, it was also verified, through the water budget boundary (percentage of water bill over average residential income), that scarcity prices are accepted as socially just, because this rate is below the affordable index of 5%, as recommended by the World Bank. The WSP model has been created for the Water and Sewage Company that operates in Campina Grande, but might be easily implemented in all other regions that are supplied by surface reservoirs and operate under similar water scarcity conditions.


  1. [1] Ag\^{e}ncia Nacional das \{A}guas - ANA. (2018), Reservoir Monitoring System, Retrieved from [Accessed 13 March 2019].
  2. [2] Ag\^{e}ncia Nacional das \{A}guas - ANA. (2017), Information Note n$^{\circ}$ 11/2017/COMAR/SER.
  3. [3] Associa\c{c\~{a}o das Empresas do Complexo Industrial e Portu\{a}rio do Pec\{e}m - AECIPP. (2018) Explanatory note: contingency rate. }Retrieved from [Acessed 01 January 2019].
  4. [4] Arbu\{e}s, F. and Villan\{u}a, I. (2006), Potential for pricing policies in water resource management: estimation of urban residential water demand in Zaragoza, Spain, Urban Studies, 43, 2421-2442.
  5. [5] Al-Saidi, M. (2017), Urban water pricing~in~Yemen: a~comparison~of~increasing block tariffs~to~other pricing schemes. Water International, 42, 308-323.
  6. [6] Al-Saidi, M. (2017), Conflicts and security in integrated water resources management. Environmental Science and Policy, 73, 38-44.~
  7. [7] Araujo, W.C., Oliveira-Esquerre, K.P., and Sahin, O. (2019), Building a System Dynamics Model to Support Water Management: A Case Study of the Semiarid Region in the Brazilian Northeast, Water, 11, 2513.
  8. [8] Baerenklau, K. Schwabe, K., and Dinar, A. (2013), Do Increasing Block Rate Water Budgets Reduce Residential Water Demand? a Case Study in Southern California. Working Paper, 01-0913.
  9. [9] Bartoszczuk, P. (2013), {Modelling sustainable water prices}. In: Handbook of Sustainable Development Planning, 2rd edn. Edward Elgar Publishing, pp 215-242.
  10. [10] Companhia de \{A}gua e Esgotos da Para\{\i}ba - CAGEPA. (2018) History of Water Consumption in Para\{\i}ba. Retrieved from{\#}. Accessed 22 April 2018.
  11. [11] Chen, H. and Yang, Z.F. (2009), Residential water demand model under block rate pricing: a case study of Beijing, China, Communications in Nonlinear Science and Numerical Simulation, 14, 2462-2468.
  12. [12] Cui, J. and Schreider, S. (2009), Modelling of pricing and market impacts for water options, Journal of Hydrology, 371, 31-41.
  13. [13] Denver Water, (2013) Drought Pricing Schedule. Denver Water.
  14. [14] Feike, T. and Henseler, M. (2017), Multiple policy instruments for sustainable water management in crop production - a modeling study for the Chinese Aksu-Tarim region, Ecological Economics, 135, 42-54.
  15. [15] Fridman, A. (2015), Water Pricing Reform Analysis: Alternative Scenarios, Journal Economy Policy Reform, 18, 258-266.~
  16. [16] Frontier Economics (2008), Approaches to Urban Water Pricing. Waterlines occasional paper no 7. National Water Commission, Canberra.
  17. [17] Grafton, R.Q. and Ward, M.B. (2008), Prices versus rationing: Marshallian surplus and mandatory water restrictions. Economic Record, 84, S57-S65.
  18. [18] Grafton, R.Q., Chu, L., Kompas, T., and Ward, M. (2014), Volumetric water pricing, social surplus and supply augmentation. Water Resources and Economics, 6, 74-87.
  19. [19] Grafton, R.Q., Chu, L., and Kompas, T. (2015), Optimal water tariffs and supply augmentation for cost-of-service regulated water utilities, Utilities Policy, 34, 54-62.
  20. [20] Griffin, R.C (2006), Water Resource Economics. 1ed edn. The MIT Press, Cambridge, Massachusetts.
  21. [21] Howe, C. (2005), The functions, impacts and effectiveness of water pricing: evidence from the United States and Canada. International Journal~of~Water Resources Development, 21, 43-53.
  22. [22] Hoyos, D. and Artabe, A. (2017), Regional differences in the price elasticity of residential water demand in Spain, Water Resources Management, 31, 847-865.
  23. [23] Hoffman, J.J. and Du Plessis, J.A. (2012), A model to assess water tariffs as a part of water demand management, Water SA, 39, 423-428.
  24. [24] Ioslovich, I. and Gutman, P. (2001), A model for the global optimization of water prices and usage for the case of spatially distributed sources and consumers, Mathematics and Computers in Simulation, 56, 347-356.
  25. [25] Instituto Nacional de Meteorologia - INMET. (2009), Meteorological Database for Teaching and Research. s/d. Retrieved from Acessed 31 August 2018.
  26. [26]  {Instituto Brasileiro de Geografia e Estat\{\i}stica - IBGE. }(2017) Estimates of resident population in Brazil and federation units with a reference date on July 1, 2017. Rio de Janeiro. Retrieved from Accessed 24 July 2018
  27. [27] Jensen, O. and Wu, H. (2018), Urban water security indicators: Development and pilot, Environmental Science and Policy, 83, 33-45.
  28. [28] Jiang, L., Wu, F., Liu, Y., and Deng, X.Z. (2014), Modeling the impacts of urbanization and industrial transformation on water resources in China: An integrated hydro-economic CGE analysis, Sustainability, 6, 7586-7600.
  29. [29] Katz, D. (2015), Water use and economic growth: reconsidering the Environmental Kuznets Curve relationship, Journal of Cleaner Production, 88, 205-213.
  30. [30] Lopez-Nicolas, A., Pulido-Velazquez, M., Rouge, C., Harou, J.J., and Escriva-Bou, A. (2018), Design and assessment of an efficient and equitable dynamic urban water tariff. Application to the city of Valencia, Spain. Environmental Modelling $&$ Software, 101, 137-145
  31. [31] Marzano, R., Roug, C., Garrone, P., Grilli, L., Harou, J.J., and Pulido-Velazquez, M. (2018), Determinants of the price response to residential water tariffs: Meta-analysis and beyond, Environmental Modelling Software, 101, 236-24.
  32. [32] Medeiros, P.C. and Ribeiro, M.M.R. (2006), Price Elasticity of Demand for Water in the Para\{\i}ba River Basin. In: VIII Symposium Water Resource Northeast, Gravat\{a}-PE.
  33. [33] Mitchell, D., Hanak, E., Baerenklau, K., Escriva-Bou, A., McCann, H., Perez-Urdiales, M., and Schwabe, K. (2017), Building Drought Resilience in Californias Cities and Suburbs, Public Policy Institute of California, United States.
  34. [34] Molinos-Senante, M. and Donoso, G. (2016), Water scarcity and affordability in urban water pricing: A case study of Chile, Utilities Policy, 43, 107-116.
  35. [35] Monteiro, H. and Roseta-Palma, C. (2011), Pricing for scarcity? An efficiency analysis of increasing block tariffs, Water Resources Research, 47, 1-11.
  36. [36] Nguyen, K.A., Stewart, R.A., Zhang, H., Sahin, O., and Siriwardene, N. (2018), Re-engineering traditional urban water management practices with smart metering and informatics, Environmental Modelling {$\&$ Software,} 101, 256-267.
  37. [37] Owusu-Sekyere, E., Scheepers, M.E., and Jordan, H. (2017), Economic Water Productivities Along the Dairy Value Chain in South Africa: Implications for Sustainable and Economically Efficient Water-use Policies in the Dairy Industry, Ecological Economics, 134, 22-28.
  38. [38] Oliveira, G.C.S. and Curi R.C. (2017), Analysis on Water Collection in the Municipality of Campina Grande - PB. Anais III International Workshop on Water in the Brazilian Semi-Arid.
  39. [39] Pahl-Wostl, C. (2019) The role of governance modes and meta-governance in the transformation towards sustainable water governance, Environmental Science and Policy, 91, 6-16.
  40. [40] Pesic, R., Jovanovic, M., and Jovanovic, J. (2013), Seasonal water pricing using meteorological data: case study of Belgrade, Journal of Cleaner Production, 60, 147-151.
  41. [41] Pint, E.M. (1999), Household responses to increased water rates during the California drought. Land Economics, 75, 246-266.
  42. [42] Pulido-Velazquez, M., Alvarez-Mendiola, E., and Andreu, J. (2013), Design of efficient water pricing policies integrating basinwide resource opportunity costs, Journal of Water Resources Planning and Management, 139, 583-592.
  43. [43] Rogers, P., Silva, R.D., and Bhatia, R. (2002), Water is an economic good: How to use prices to promote equity, efficiency, and sustainability. Water Policy, 4, 1-17.
  44. [44] Riegels, N., Pulido-Velazquez, M., Doulgeris, C., Sturm, V., Jensen, R., M{\o}ller, F., and Bauer-Gottwein, P. (2013), Systems analysis approach to the design of efficient water pricing policies under the EU water framework directive, Journal of Water Resources Planning and Management, 139, 574-582.
  45. [45] Rico, A., Olcina, J., Ba\~{n}os, C., Garcia, X., and Sauri, D. (2019), Declining water consumption in the hotel industry of mass tourism resorts: Contrasting evidence for Benidorm, Spain, Current. Issues in Tourism, 23, 1-14.
  46. [46] Sahin, O., Stewart, R.A., and Porter, G. (2014), Water security through scarcity pricing and reverse osmosis: a system dynamics approach, Journal of Cleaner Production, 88,160-171.
  47. [47] Sahin, O., Siems, R.S., Stewart, R.A. and Porter, M. G. (2016), Paradigm shift to enhanced water supply planning through augmented grids, scarcity pricing and adaptive factory water: a system dynamics approach, Environmental Modelling {$\&$ Software}, 75, 348-361.
  48. [48] Sahin, O., Bertone, E., and Beal, C.D.A. (2017), Systems approach for assessing water conservation potential through demand-based water tariffs, Journal of Cleaner Production, 148,773-784.
  49. [49] Sibly, H. (2006), Efficient urban water pricing. Australian Economic Review, 39, 227-237.
  50. [50] Tsur, Y. (2005), Economic aspects of irrigation water pricing, Canadian Water Resources Journal, 30, 31-46.
  51. [51] Vairavamoorthy, K., Gorantiwar, S., and Pathirana, A. (2008), Managing urban water supplies in developing countries e climate change and water scarcity scenarios, Physics and Chemistry of the Earth, Parts A/B/C, 33, 330-339.
  52. [52] Who/Unicef. (2017), Progress on Drinking Water, Sanitation and Hygiene. Update. WHO/UNICEF. Joint Monitoring Program for Water Supply, Sanitation and Hygiene (JMP), New York and Geneva.
  53. [53] World Health Organization - WHO. (2011), Guidelines for Drinking-water Quality. World Health Organization, 4rd edn. Switzerland.
  54. [54] Xu, Y., Li., S., Liu, F., Qian, J., Cai, Y., and Cheng, G. (2018). A Risk-averse Two-Stage Stochastic Optimization Model for Water Resources Allocation under Uncertainty, Journal of Environmental Accounting and Management, 6, 71-82.
  55. [55] Zhao, R. and Chen, S. (2008), Fuzzy pricing for urban water resources: model construction and application, Journal Environmental Management, 88, 458-466.
  56. [56] Zhao, J., Ni, H., Peng, X., Li, J., Chen, G., and Liu, J. (2016), Impact of water price reforms on water conservation and economic growth in China. Economic Analysis {$\&$ Policy}, 51, 90-103.