7. Subsidies for Drinking Water Conservation in Cyprus

This study investigates four subsidies for drinking water conservation initiated in Cyprus in 1997, namely: the construction of domestic boreholes for garden irrigation, the connection of a borehole to toilet cisterns for flushing, the installation of domestic grey-water recycling systems, and hot water recirculators. The policy objective on launching these incentives, presented here as an Economic Policy Instrument (EPI), was to reduce drinking water demand in households, partly supplied by desalination, especially during drought periods. Thus, the focus of reducing drinking water consumption was not directly linked to an overall reduction of the domestic water consumption. From 1997 to 2010 a total of 13,172 subsidies have been granted, amounting to EUR 5.5 million, resulting in a cumulative saving of 12.42 mio m³ of water. The overall performance of this EPI is subject to uncertainty, while its overall usefulness as an EPI is questionable due to externalities, mainly related with its impact on the overall domestic water consumption and the exploitation of regional groundwater resources.