ABSTRACT
This chapter examines how far economists can contribute to the cause of sustainability in the water sector. Marginal cost pricing, expanded to include environmental and user (depletion) costs, is a necessary condition for sustainable use, but its many practical problems, and the failure to adopt it universally, mean that pricing alone will not achieve sustainability. The neatest definition of SD in the water sector is 'the use of water resources which imposes no cost on future generations, such as might arise through depletion of the resource or through a reduction in its quality'. The opportunity cost principle implies knowledge of the values of water in different uses. The discussion of sustainability in the water sector has illustrated some of the difficulties in applying categorical principles such as the sustainability rule. The presence of numerous water sub-systems, and of various kinds of barriers between suppliers and consumers, favours an approach incorporating opportunity costs and differential water values.
