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Social tariffs for water and waste services in mainland Portugal: an impact analysis

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Economic affordability and access to water and waste services (WWS) are extensively studied topics in economic literature. However, most papers focus on social rights or the importance of water provision for equity and development. The impact of different regulatory and/or management models, the measurement of affordability and efficient pricing have all deserved the attention of researchers, but few studies assess the actual revenue impact of the existing social support mechanisms. For Portugal, while some preliminary data collection has taken place, a comprehensive review is still lacking. With this paper, the Water and Waste Services Regulation Authority (ERSAR) takes a first step towards filling that gap, by calculating the amount of subsidisation inherent in the adoption of social tariffs in mainland Portugal municipalities. Starting with an account of the current status quo, the article analyses different subsidisation situations, including a hypothetical framework where social tariffs are administered according to ERSAR's guidelines. Results indicate that, if ERSAR's Recommendation were fully applied, the number of social tariff beneficiaries could be above current figures, possibly translating into a disproportionate burden on the remaining WWS users through the application of higher bills. In the context of the severe economic crisis that is forcing families into increasing budgetary constraints, the article stresses issues of feasibility, drawing on the policy implications of the adoption of such discounts.

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