Efficiency and Equity in Natural Resources Pricing: A Proposal for Urban Water Distribution Service

This paper focuses on the design of optimal prices for urban water distribution service. In this context, pricing should be aimed at achieving efficiency, equity, financial aspects, and/or public acceptability and transparency. The proposed tariffs are based on the theoretical frameworks suggested by Ramsey (1927) and Feldstein (1972). As a prior step, estimations of urban water demands and water costs are carried out for the Spanish municipality of Seville. Finally, an empirical comparison, in welfare terms, is conducted between the proposed tariffs and those applicable in the year 2000.