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Pricing proposals for domestic water usage, in the Chania Municipality, using Game Theory

Sovolou Afroditi

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Summary

The growing pressure on the aquatic environment necessitates the implementation of sustainable water resources development and management policies. Water management and rational use are often the cause of conflict between groups that are called upon to share it. Game Theory is a decision study tool that those involved in water resource management issues can choose strategies to optimize their profits.The present study revolves around the optimal household water billing policy in the Municipality of Chania, Crete in the context of environmental, social and economic perspectives. A statistical study conducted among 203 residents of the city of Chania shows that the exorbitant fixed charges are anything but motivating to give the residents to reduce the unnecessary and reckless use of water.The purpose of this thesis is to study alternative water pricing scenarios in a broader effort to prevail environmental policy, information and public awareness in order to create this framework where everyone will consume valuable natural goods in a conscientious manner.Therefore, through a variation of the prisoner's dilemma, a zero-sum game with two players was proposed. In this game, the Municipal Water Supply and Sewerage Company of Chania (DEYACH) is Player 1 with its interests in conflict with those of the residents of the city of Chania, who constitute Player 2. Four scenarios were developed for the gradual reduction of fixed fees on the part of DEYACH while making assumptions about a different degree of change in the behavior of citizens regarding the consumption of domestic water for each class of water consumption. Since DEYACH is a Legal Entity under Private Law, with a public benefit - non-profit - character, it is considered that it does not aim at increasing its profits. For its part, in fact, it must take care of the issue of network leaks, which are due in part to the discrepancy between volumetric water consumption and the financial charging of consumers.

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