Tradable water saving certificates to improve urban water use efficiency: an ex-ante evaluation in a French case study

Jean-Daniel Rinaudo (1) , Javier Calatrava (2) , Marine Vernier de Byans (1)

1 BRGM - Bureau de Recherches Géologiques et Minières (BRGM)
2 ETSIA

This paper proposes a system of tradable Water Saving Certificates to improve the efficiency of water allocation between Drinking Water Utilities at river basin level. A market institutional set-up, inspired from recent policy developments in the energy sector, is proposed. An original analytical price-endogenous model is developed to simulate trade intensity, equilibrium price and efficiency gains in this urban water market. The economic model is implemented in a French case study using mathematical programming. It is used for conducting an ex-ante evaluation of trade possibilities and efficiency gains, considering different spatial restrictions aimed at controlling environmental externalities. Our modelling exercise provides evidence of the benefits of the proposed Water Saving Certificate scheme.

Keywords: water management & policy; water market; tradable water saving certificates; mathematical programming; efficiency JEL classification: C61; D47; Q25

Domains: Hydrology

Jean-Daniel Rinaudo, Javier Calatrava, Marine Vernier de Byans. Tradable water saving certificates to improve urban water use efficiency: an ex-ante evaluation in a French case study. Australian Journal of Agricultural and Resource Economics, 2016, 60 (3), pp.422 - 441. ⟨10.1111/1467-8489.12132⟩. ⟨hal-01695861⟩