Water is arguably the most valuable resource on the planet, yet its value is difficult to determine because it is a common natural good for which there is no alternative. Economic instruments have immense potential for improving water use and allocation. In Eastern Partner Countries, water utility revenues typically only cover about 60% of the real operational costs. As a result, utilities have low levels of service, while resources for new investments are even scarcer.
The EU4Environment Water and Data programme aims to assess the strengths and weaknesses of the current economic instruments and tariff systems in Azerbaijan and provide policy-makers with a critical knowledge base for enhancing the enabling water-related investments. Strong political will to reform water-related policy instruments and subsidies can send a powerful signal to investors and international financial institutions, building confidence and appetite for action.
In Azerbaijan, opportunities for using economic instruments to incentivise water use efficiency, including in agriculture and with a particular link to introduction of latest technologies are in the focus of the analysis. Work consider the opportunities for differentiated tariffs recognising regional differences. Work consider the need to maximise the impact of the polluter pays principle, particularly with regard to transboundary waters and improving the economic strength of River Basin Organisations.