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Objective: provide an empirical investigation on a river-basin system of water charges. An economic analysis has been conducted on Brazilian industrial plants, to investigate a) the behaviour of firm managers regarding industrial water use, in conjunction with other production inputs (labour, energy) ; b) which factors play a role in explaining firms’ decision-making concerning water reuse and whether the structure of intake water demand differs between firms that adopt water reuse practices and those which do not.

The solutions is the making of a model for industrial water use from econometric estimation of firms’ decisions regarding production, input use and water reuse: this solution is an analysis which shows that the volume of water requirements will be an important determinant to the water reuse decision which in turns proves the water charge mechanism implemented in the Paraíba do Sul river basin may act as an effective instrument for inducing firms to undertake water reuse investments. The solution’s key output is the economic model of decision regarding industrial water use, providing quantitative assessments of price and water reuse policies. It is to be considered a research-initiated tool for evaluating industrial water-pricing policies and predicting future levels of water withdrawals given scenarios of economic growth in Brazil.

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