User based water charges went live on the 1st of October. Consumption charges are regressive, impact disproportionately on low income households and the introduction of user based water charges raises significant affordability issues. The current system of free allowances is expensive, poorly targeted (with subsidies for richer households) and economically inefficient. In the accompanying NERI inBrief I briefly describe two alternative models. These are a water credit model to prevent water poverty, and a zero free allowance model to generate a more progressive distribution of the cost of water service provision while maintaining the user pays principle.
In an NERI inBrief entitled 'Water Charges, Water Poverty and Water Credits' I discuss one aspect of the new regime: affordability and distribution of cost.
The NERI Seminar on the 12th of November will assess the different funding models available and consider the implications of the chosen model. Details are here