Drivers of Water Supply Costs in Mediterranean Spain

Abstract

This work analyses the drivers of water supply costs relying on a panel data model within a sample of Spanish Mediterranean municipalities between 2014 and 2016, in the provinces of Alicante and Murcia. These provinces have been chosen due to their common feature: water scarcity in the Southeast of Spain. The source of the dependent variable of the econometric model (costs) is a new dataset called actual cost of services of local entities (CESEL, in Spanish), which is published by Ministry of Finance and Civil Service. This new source emerged in response to financial problems experienced by local entities after the global crisis. Bearing in mind the homogeneity of municipalities studied in terms of water management, selected drivers of the equation focus on urban growth and demographic factors. The findings show that urban variables, such as higher net urban density, have a significant impact on the decrease of water supply costs.