The European Water Framework Directive dictates that the water pricing policy should provide incentives for users to use water resources efficiently. The efficient use of water is necessary because of the implications of the water consumption to public health and the environment. In Flanders, a tariff policy for cost allocation of drinking water and remediation are used in combination with other methods (such as raising awareness and technical improvements) as an instrument to stimulate moderate water consumption.
SEOR has developed a method to estimate the price elasticity of tap water and provide insight into the impact of the tariff structure on drink water consumption. This study was commissioned by the Flanders Environment Agency (VMM). The price elasticity of the demand for tap water proves to be relatively inelastic. This implies that the tariff has little influence on consumption.