Within this principle, it is vital to recognize first the basic right of all human beings to have access to clean water and sanitation at an affordable price. Managing water as an economic good is an important way of achieving efficient and equitable use, and of encouraging conservation and protection of water resources. As soon as water is collected from a source, it has a price as an economic and social good. Past failure to effectively manage water resources is associated with failure to recognize the economic value of water. Water cost and charge are two different things that should be clearly differentiated. As a regulating or economic mean, water cost in alternative uses is important to efficiently distribute water as a scarce resource. Water charge is used as an economic tool to support vulnerable groups and influence their water saving and efficient use behaviors by providing incentives to manage demand, cost recovery and readiness of individual users to pay for extra water management services.
Recognizing water as an economic good is a key decision-making tool to distribute water among different sectors of the economy and different users within sectors. It is particularly important when water supply cannot be increased.