Charges for abstractive and non-abstractive use of water resources were introduced in Georgia in 1994. Later, in 2004, natural resource use charges were dropped from the newly adopted Tax Code and replaced by fees for the use of natural resources governed by the Law on Fees for Use of Natural Resources (2004). Today in Georgia water abstraction fees are only applied to groundwater resources, whereas no fees exist on the abstraction of surface water.
The Association Agreement that Georgia signed with the European Union in 2014 committed Georgia to the implementation of the EU Water Framework Directive (WFD). This includes a more systematic use of economic instruments, including water pricing, to cover the costs of water services and the development of river basin management plans.
This study focuses in particular on surface water abstraction charges. These charges can create an incentive for water abstractors to minimise their drawings of water, reduce its waste and loss in transit, and pass on these charges to the final users who, in turn, have an incentive to economise on consumption. If set at adequate levels, abstraction charges can signal the real resource cost of the water. Abstraction charges or taxes are also a source of financial revenues, enabling funds to be raised either for water resources management, covering operational and maintenance costs within the water sector and supporting opportunities for strengthening river basin organizations and the implementation of the Programs of Measures for Georgia’s River Basin Management Plans.
* Note: This project was completed by the N(N)LP Operational Research Institute, under which the team of Operations Research Institute LLC operated from 2021 to 2024.
