ABSTRACT
This chapter focuses on the formidable barriers to implementing anything approaching economically ideal market instruments in the water-supply sector. Several water-supply authorities in the United States have recognized that they have a role to show commercial, industrial and institutional customers that increased water efficiency makes good business sense and to help clear the hurdles to implementation. Proper water pricing, which maximizes the total value in use of water over time, not necessarily also ensure that all consumers are able to satisfy their basic needs and maintain their livelihoods. Water use and waste-water disposal are not just subject to regulation direct and indirect by various public sector agencies, but also by the nature of the markets for agricultural and manufactured products and by social forces, which affect consumption norms and public attitudes. The wholesale introduction of Long-run Marginal Cost (LRMC) pricing for water supplies and waste-water disposal represents a major policy shift.
