Design the Water Tariff Structure

Research Brief P029 Water (MDPI)

AquaBridge Research Team

Mar 27, 2023 · 4 min read

Executive Summary

Key Finding: Optimization model for Increasing Block Tariffs (IBT) ensures compliance with SDG6 (Clean Water & Sanitation). Case study in Southern Italy shows polluter pays principle integrated with social protection.

Policy Takeaway: IBT optimization balances operator revenue needs with sustainability for virtuous users and penalties for wasteful consumption.

IBT Optimization Model (P029)

Objective Function: Minimize difference between pre/post-TICSI tariffs while ensuring:

Economic Constraint: ARERA (Italian authority) compliance
Social Constraint: Protection for less well-off households
Environmental Constraint: Consumption grows with rate (polluter pays)

Results: Optimized vs. Standard IBT

Block	Standard Rate	Optimized Rate	Impact
1 (Lifeline)	$0.50/m³	$0.45/m³	↓ 10% (protect poor)
2 (Standard)	$0.80/m³	$0.85/m³	↑ 6% (cost recovery)
3 (Premium)	$1.20/m³	$1.35/m³	↑ 12.5% (polluter pays)

Application in AquaBridge Toolkit

Our Tariff Designer uses this model:

Management Type Recommendations: Public→IBT, Private→Linear, Community→Lifeline
Block Configuration: 3 blocks with auto-optimized rates
SDG6 Compliance: Built-in sustainability checks

View Tariff Structure

Reference: De Mare, G., Macchiaroli, M., & Dolores, L. (2023). Design the Water Tariff Structure: Application and Assessment of a Model to Balance Sustainability, Cost Recovery and Wise Use. Water, 15(7):1309. Read Full Paper →

Application in AquaBridge Toolkit

Our Tariff Designer uses this model:

Management Type Recommendations: Public→IBT, Private→Linear, Community→Lifeline
Block Configuration: 3 blocks with auto-optimized rates
SDG6 Compliance: Built-in sustainability checks

View Tariff Structure →

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