You are here: Home Knowledge Base Environment Water Scarcity and Virtual Water Trade Solutions Adopt multi-tier pricing to encourage the efficient use of water, while guaranteeing access to water for personal and environmental purposes.
Symposium 2011

Solution for Water Scarcity and Virtual Water Trade

The Challenge

Two fifths of the world’s population faces water shortages. During the coming decades, water scarcity is expected to rise as a result of a rapid increase in the demand for water due to population gr ...

Two fifths of the world’s population faces water shortages. During the coming decades, water scarcity is expected to rise as a result of a rapid increase in the demand for water due to population growth, urbanization and increasing consumption of water per capita. In addition, climate change is expected to influence the supply of water, modifying the regional distribution of freshwater resources.

Adopt multi-tier pricing to encourage the efficient use of water, while guaranteeing access to water for personal and environmental purposes.

Multi-tier pricing differentiates between water as a basic right and water as a commodity. The provision of water for basic needs and personal use should be guaranteed for free (or at least at an affordable price), while water should be priced for its commercial use in agriculture and industry.

Agriculture, the largest user of freshwater resources, encompasses both personal use (subsistence farming) and commercial use (large-scale farming). So the challenge is to ensure an effective pricing mechanism that considers environmental, economic and social costs and benefits. Moreover, the price should accurately reflect the scarcity of freshwater resources. An appropriate water pricing scheme would send correct allocation signals to markets and make virtual water trade visible.

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