Water Pricing Model

This research paper presents a high-resolution nationwide water supply model calibrated with 2010 data from Israel to determine optimal water extraction and pricing. The study suggests that desalination capacity was overbuilt and that current water economy legislation carries a significant welfare cost.

• The model indicates that optimal aggregated desalination in Israel is significantly lower than current levels, representing only 33% of present capacity and 57% of 2010 capacity. Even under a scenario where recharge declines by 40% due to climate change, the model only requires 50% of present desalination capacity, suggesting that the construction of these facilities, which started in 2005, could have been delayed.
• The study finds that the optimal extraction of fresh water is only 2% higher than the total observed supply, although significant deviations exist for specific sources.
• The research identifies a substantial gap between average and marginal costs due to scale economies, leading to a welfare cost of over USD 100 million per year—approximately 10% of the water economy's share of the GDP—resulting from the Israeli Balanced Budget Water Economy legislation.

APA

Stockholm Environment Institute (2016). Water Pricing Model. https://www.sei.org/publications/water-pricing-model/

Chicago

Stockholm Environment Institute. Water Pricing Model. 2016. https://www.sei.org/publications/water-pricing-model/.

Wikipedia

{{cite report |author=Stockholm Environment Institute |title=Water Pricing Model |date=13 July 2016 |url=https://www.sei.org/publications/water-pricing-model/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{stockholmenvironmentinstitute2016water, author = {{Stockholm Environment Institute}}, title = {{Water Pricing Model}}, institution = {Stockholm Environment Institute}, year = {2016}, month = jul, url = {https://www.sei.org/publications/water-pricing-model/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }