MANAGEMENT OF WATER DEMAND ELASTICITY POTENTIAL

Abstract

Public water supply, as a natural monopoly, implies the provision of sufficient quantities of drinking water, as well as the drainage and treatment of used water by utility users.  Regulatory framework of water supply organizations, availability of resources, management, economic potential, national history and culture; potentially affect the structure and level of water supply prices. Optimization of operating costs of water supply organizations, harmonized supply and demand of water in the context of sustainable development, are inputs in defining the business framework. Based on the conducted independent research, meta-analysis identified and analyzed the examined variables, their Relationship with each other and the moderators. It is necessary to know how supply and demand react to changes in water prices, what are the results and their implications!? Although standard neoclassical economics is based on preferences and a continuous function of water utility, the result of the research on the analysis of indicators of water use, water price and household income, indicates a complex reaction of variables. Price elasticity of demand is a measure of how much the quantity of water demanded changes when its price changes, expressed as a percentage. Principal implements various innovative economic instruments for more efficient management of water resources, promoting water conservation and reducing water consumption, during the implementation of various economic activities. The application of smart systems for measuring water use is recommended, which are based on the development of digital architecture, which creates the prerequisites for determining the direct causality of demand elasticity and pricing policy on the one hand, in relation to total revenue, covering capital investments, operating costs, and providing missing resources and degraded environmental values.