Sustainable Approaches in Water Tariff Design to Reduce Water Service Divide

Inequality in access to water and the use of the water service is a global problem which requires an equitable distribution of the resource and its efficient management. Although universally recognized by the United Nations as an inviolable human right, access to water and sanitation is often characterized by inequalities which also manifest themselves through different levels of quality in the provision of water supply, purification and sewer. Also in Italy, the Water Service Divide is significant and affects about a third of the population. The National Regulatory Authority for Energy, Networks and the Environment (ARERA) has introduced a simplified approach to defining water tariffs aimed at water operators with difficulty overcoming this problem. However, the scheme is not always easily applicable, especially in cases where it is also necessary to design the tariff structure and the related incremental blocks (or brackets). To remedy this criticality, in the present work a mathematical programming model is proposed, based on the simplex algorithm, which allows the estimation of water tariffs and consumption blocks also for water operators characterized by the absence of data on costs and revenues of water management. The proposed model, which guarantees compliance with all the economic constraints imposed by the national Authority, makes it possible to design consistent tariffs between the various water service operators, reducing management gaps. The model, easily applicable by the operators, can also represent a simplified scheme for the initial tariff planning which is independent of the knowledge of the data on operating costs and revenues.