Sustainable Water Demand Management and Incentive Tariff: Evidence From a Quantile-on-Quantile Approach

This paper proposes an original assessment of sustainable water demand management policy in Tunisia over the last five decades. Using quarterly data from 1988 to 2015, describing six heterogeneous regions, we employ the novel and robust Quantile-on-Quantile (QQ) approach. We show that in Tunisia, the incentive water tariff used to ensure the sustainability of water management was unfair. Low-income water consumers are negatively affected by the nonlinear tariff more than high-income consumers. In addition, the QQ results show spatial variability and regional disparity characterizing the relationship between water price and consumption for different quantile levels. The paper argues for a decentralized water pricing system to achieve the goal of social equity and an alternative water management policy.