Understanding the value of water - a comparison between policy and public attitudes in Saudi Arabia and Ireland

With annual average rainfalls of 59 mm and 1180 mm respectively, the dif-ference in renewable water availability between Saudi Arabia and Ireland is stark. For both countries, until recently, the price of water for domestic con-sumers has been zero or almost zero. Per capita water usage was high, and the cost of providing the supply was heavily subsidized by the govern-ment.
To recover some of the supply costs and address the financial shortfall suffered by water utilities, a new tariff for household water was introduced in Ireland in 2014 and in Saudi Arabia in 2015. In both countries, the pub-lic was unprepared for the price increases, which led to significant public opposition, revealing a lack of appreciation of the value of water and the cost of supply.
This paper examines the history around low domestic water prices in Saudi Arabia and Ireland, and the public responses to the recent price in-creases. It highlights warnings from economic theory that when water is un-dervalued, both its allocation, and its use will be inefficient. It argues that a more comprehensive public understanding of the value of water must be developed to ensure that consumers are willing to pay to cover the cost of supply. The experience of water pricing from water stressed countries such as Saudi Arabia, is helpful for less water-stressed countries facing new situ-ations of climate-change induced scarcity, and higher costs of supply.