ABSTRACT
Many water development activities for both the urban and rural sectors have involved large government subsidies. Agricultural pollution is usually of the non-point source type, as is runoff of automotive wastes from streets and highways and, frequently, urban domestic waste such as discarded motor oil. Although transaction costs are critical in determining the water system that best suits a given metropolitan area, other factors are also important, such as production costs and economies of scale. As new sources of water become increasingly expensive and difficult to finance, the transaction costs involved in demand management strategies will not appear to be so high. Many cities convey water over long distances and make extensive use of high-cost pumping. Management alternatives depend on a country’s hydrologie stage of development and the age of its metropolitan water systems as well as the stage of its economic development.
