The role of water tariffs as a determinant of water saving innovations in the hotel sector

The hotel sector is one of the biggest consumers of fresh water within the tourist economy.However, the implementation of policies to increase water efficiency in this sector is still an ongoing process. Specifically, the research on the market-based motivational tools is limited. This study attempts to provide an insight to the role of water tariffs in the implementation of water saving innovations in Majorcan hotels. Using the framework of the Porter hypothesis, a model predicting the probability to implement this type of innovation is elaborated. The results show that hotels in the areas with the highest water tariffs are more likely to implement water-saving innovations than hotels in other locations. The paper discusses the challenges faced in order to achieve an efficient water tariff design for hotels, emphasizing the need for development of water consumption benchmarks and measuring of price elasticity as main directions for future research.