Cost of Urban Wastewater Treatment and Ecotaxes: Evidence from Municipalities in Southern Europe

Abstract

The principle of cost recovery established by the Water Framework Directive underlines the need for tax rates, which can raise enough revenue to finance the cost of treatments applied to wastewater. The objective of this research is to gain an understanding the different types of charges related to urban wastewater treatment that can be levied by the authorities responsible for this service. This paper also aims to determine whether these taxes contribute to guaranteeing the economic feasibility of the wastewater treatment plants. The proposed methodological approach is applied to 18 municipalities of a province in southern Europe in 2017. The results confirm that in most of these cases, the taxes levied do not guarantee adequate tax revenues to cover the running, maintenance and investment costs of municipal wastewater treatment plants. This situation leads to a lack of financial self-sufficiency in the wastewater management service, meaning that the imbalance between income and expenditure has to be covered by government subsidies. The results of this study will help guide authorities around the world that are in charge of managing urban wastewater treatment services.