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Pollution from wastewater discharges requires the treatment of all wastewater to maintain water bodies in good condition, as well as the possibility of reusing this water. Thus, wastewater treatment is an activity that has developed significantly in the Region of Valencia and has significant costs, including energy, which represents the main economic cost and an important environmental cost. In this way, efficiency and adequate financing of this activity are essential to minimise our environmental impact. However, the main funding tool currently does not allow us to address this issue, so we have a wastewater treatment with a high environmental cost in the form of greenhouse gas emissions. This tool is part of the revenues of water services, so it is not entirely independent, but it also seeks to prevent households from paying too high a total price. This leads to a situation where changes are needed to improve the financing of the different water services, as the financial resources obtained are insufficient and do not allow the current environmental problems to be solved. The analysis shows the importance of an appropriate tariff structure, as well as the need to include aspects such as water pollution and energy costs in the wastewater treatment tariff.

The Financing of Wastewater Treatment and the Balance of Payments for Water Services: Evidence from Municipalities in the Region of Valencia