Explaining Water Pricing through a Water Security Lens

Can water security serve as a platform for developing a long-term solution to ongoing water crises? Many regions around the world are experiencing severe water problems, including water scarcity, water-borne diseases, water-related natural hazards, and water conflicts. These issues are expected to increase and intensify in the future. Both developed and developing economies face a water supply and demand imbalance that will potentially influence their water pricing structures. Institutions and policies that govern the pricing of this natural capital remain crucial for driving food production and providing services. The complex and multifaceted issues of sustainable water management call for a standard set of tools that can capture and create desired water security scenarios. Water pricing is an important contributing factor for achieving these scenarios. In this paper, we analyze how water pricing can be used as a tool to enact the water security agenda. This paper addresses these issues from three facets: (1) Economic aspects—the multiple processes through which water is conceptualized and priced; (2) analysis of water pricing considering its effect in water consumption; and (3) arguments for assessing the potential of water pricing as a tool to appraise water security.