The project “The future of Swiss hydropower”Project “The future of Swiss hydropower”1 investigated the distribution effects upon changing the rigid water fee to a flexible model with a different basic amount and different reference prices in the canton of Graubünden.Hediger et al. “Water Fee-induced Financial Flow in Switzerland”, Final Report, April 20192 This also looked at the effect on intercantonal equalisation payments and the shifts that result in the resource strength of the individual municipalities.
In Graubünden, the revenues from water fees are split roughly 50/50 between the canton and the municipalities. If the maximum water fee is increased, revenues of course also increase for both the canton and the municipalities – and they fall if the maximum is reduced. The contribution of the canton to resource equalisation, however, reveals a slightly different picture: it is at its lowest with a maximum water fee of CHF 80 per kW and CHF 50 per KW; it is higher with a higher maximum water fee but also in a scenario which sees the complete elimination of water fees as the canton would have to pay certain compensation.
The water fee also influences the number of municipalities classified as having a high and low level of resources. The higher the revenues from the water fee, the more municipalities there are that are deemed to have a high level of resources and thus that also pay into the cantonal pot for resource equalisation.
Between 2016 and 2018, the financially weaker municipalities received between CHF 26 and CHF 27 million. The financially stronger municipalities provided the canton with around CHF 18 million, while the canton itself bore the remaining CHF 8 million.
Cantonal resource equalisation therefore ensures that all municipalities also benefit from the revenues in the case of a flexible water fee – and that the burden is spread between all communities should lower revenues be generated.
