Full cost recovery of water services: which room for common pool resources’ institutions?

In Europe, water consumption decline in cities leads operators of water services to raise the unit prices; which in turn leads to question billing as the sole way to cover the costs, in particular environmental and resource costs. The OECD 3 T’s (tariffs, taxes, and transfers) cost recovery approach is used to discuss possible solutions to implementing the triple bottom line approach of sustainability in the water services sector; reconciling the three dimensions (economics, environment, equity) which potentially diverge, calls in turn for new governance mechanisms. And when water resources are considered common pools, the recovery of environmental and resource costs paid by authorities in charge of water services could be made by institutions organizing transfers, like payments for environmental services. In France, the agences de l’eau are blocked by central government, and with the implementation of the WFD, the levies collected on domestic water bills are increasingly used to improve the aquatic environment. This generates a conflict with local authorities and consumer NGOs, which consider that, being service fees taken from water bills, levies should be returned as subsidies to WSS services’ improvements. The paper proposes a re-organization of the financing system of water policy, rebalancing between tariffs and taxes, and creating levies for common pool resources management at the scale of local river basin institutions.