Application of Fuzzy Logic in Calculation of Urban Water Tariff in Iran

Document Type: Research Paper

Authors

1 PhD Candidate of Agricultural Economics, University of Sistan and Baluchestan, Zahedan, Iran.

2 Assistant Professor of Agricultural Economics, University of Sistan and Baluchestan, Zahedan, Iran.

3 Associate Professor of Agricultural Economics, University of Sistan and Baluchestan, Zahedan, Iran.

Abstract

Water consumption has increased in urban areas, so it is important to calculate its tariff. In Iran, Increasing Block Tariffs (IBT) is used to calculate the water tariff. The first disadvantage of this approach is that many hidden subsidies are given to wealthy and high-income people, which consequently leads to an unequal distribution of income. The next drawback is that consumers at the beginning of a higher block should pay their total water prices according to the price of that block. This paper proposes a fuzzy inference system (FIS) to tackle these problems. The results showed that when the FIS was used, the hidden subsidies for low-income and low-consumption households were increased when compared to the IBT method. This increase in subsidies is due to lower water tariffs for low-energy subscribers and tariff increases for high-consumption customers. The monthly water tariff was calculated for 5 m3 of consumption as to be 7,095 and 1,715 IRR (Iranian Rials) using the IBT and FIS, respectively. These values were calculated to be 370040 and 254960 IRR by these methods for a consumption of 40 m3/month, respectively. As it can be seen, the application of FIS indirectly shifts the hidden subsidies to low-cost subscribers. Another important finding is that FIS simplifies computational complexity of calculating water tariffs as compared to IBF and, at the same time, it does not cause a sharp increase in tariffs in a higher-consumption block; besides, the price is calculated more equitably. The results showed that the water tariff accounting system in Iran is more likely to result in the waste of resources and unequal distribution of water subsidies. It is suggested to make reforms in water pricing policies and to raise public awareness of water consumption reforms.

Keywords