Social considerations in domestic water pricing : a case study of Perth, Western Australia

Domestic water pricing is a challenging balancing act of the three critical dimensions of sustainability: economic, environmental, and social objectives (OECD, 2010). The Increasing Block Tariff (IBT) approach to water pricing is growing in popularity throughout the world because, arguably, it is seen to best address all three dimensions. However, social equity considerations are often at odds with other criteria and needs special scrutiny, as affordability and equity aspects may not be properly addressed especially when income and household size are not accounted for. This paper looks at social considerations that are relevant for decision making in water pricing for the city of Perth, Western Australia and proposes a pricing scheme that would address the social issues satisfactorily. The optimisation model, Particle Swarm Optimization (PSO), which has been used in this study can also be applied when multiple objective functions that include other considerations such as economic efficiency and environmental sustainability are used.