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Section 10. Economics of nature management
DOI: http://dx.doi.org/10.20534/EJEMS-17-1-68-70
Kurbanov Doniyor Rozumbayevich, Senior research assist. "Finance" Banking and Finance Academy of the Republic of Uzbekistan, Uzbekistan, E-mail: abbas-sh@mail.ru
Price formation in water economy
Abstract: Price formation in water economy is based on estimation of water resources (water objects). In connection with choosing certain method, we will have equivalent of some amount of definite water object. At first sight, it seems that this matter can't create any difficulty. But in fact, when we tried to determine its exact amount, we saw contradicting and very difficult circumstances. As a result, we will have estimation "in first approximation" of water resources and in many cases insufficient appreciation of natural resource as water, and in turn it concludes in abundantly difficulty of researched water system. We can select several methods on estimation of natural resources and among them exists economic estimation of water. According to the reasonableness, followings are the most important points of view: a) market estimation; b) rent; v) point of view on expenses; g) corresponding amount; d) total economic amount. Let's try to consider each of characteristics of stated point of views (methods).
Keywords: water resources, water economy system, natural resources, prices of water resources, water economy, ecologic resources.
Market mechanism of forming estimations in water of government. As government is interested part from
economy. For the first water resources should be char- creating market relations with equal rights, it must cre-
acterized in the market as product. It requires that wa- ate regulating body. This body must limit intentions of
ter resources should be in the circulation on the basis system on taking profits by increasing prices for using un-
of marker laws. Basing on different "Signals" about their changeable water resources. As a result regulating body
deficiency, the main quality of market is its reasonable fixes price in the market. Representative of government
using of different resources. But decrease of whole en- executes tariff policy against monopoly, regulates inter-
vironment objects (resources), especially water objects, ests ofWater economy system and water users, providing
and excessive pollution, means that several destruction with accounting models of numeral indexes. But, nobody
exist in the market mechanism. Prices, organized in can guarantee excessive regulation of corresponding pro-
"Water markets" expresses distortions of real amount cesses at such methods. Inaccuracy of effective solution,
(prices) of water resources. They don't express neces- implicitly variation information (numbers) used in cal-
sity of using social expenses and ecologic factors. As a culations from real level, absence truthful information in
result, lack of water resources and amount of demand the regulating bodies about water users (they are inde-
and supply are estimated un-correspondingly. All of that pendent economic agents, they can't be compelled to
create decreased incentive in effective using and protec- obligatory inform center about technological and oth-
tion of water resources. At the present time, there ex- er information concerning their work, according to act-
ist two methods for execution market relations against ing regulation, they can present numbers, permitting ful-
water resources. First method arises from the fact that fillment tax control), also prices, calculated with effective
water resources are state property. System of water and "fair" models don not also correspond to interests of
economy monopoly owns them, and is representative country. Water economy system, not influenced to price,
Price formation in water economy
turns to net bureaucratic organization leading to following consequences: tend "Expenses"; indifference to increasing effectiveness of own work (it is considered that this task is given to regulating body); abuse of necessity and interests of water users and others. Appropriate variant to such approach is noninterference of government to process of price formation. At such cases, Water economy system arises in the water market and water economy services as monopolist economy organization and prices to this products become a subject of agreement between Water economy system and water users. But market doesn't correspond to conditions of classic model of free market having improved competition due to seller's monopolism, agreement price doesn't include constant features, typical to prices sold in the free public market. Due to that, it is important revise a matter about ability of completely and comprehensively providing market system, serving for mutual communication process between water users and owner of natural resources. At that more probable and acceptable condition is using partly regulation of government in places where market can't regulate mutual fair relations.
Hang-the-expense approach on price formation in water economy. Such approach needs collect preparing and using expenses of water object. It gives opportunity to initial estimation of water resources. And its amount may be a starting point in determining of price. If water removed or degraded from such method, amount of its re-creation is widely used for estimation. At such cases, compensation potential expenses necessary for exchange lost or damaged resources to equal amount are calculated. Expense method includes principle contradictions: as water has good quality as an object, we can so easily use it, and we need less expenses for its developing and it takes less prices according to the expense conception.
Concept of appropriate amount ofprice formation in water economy (lost profits, income and advantages). This concept has decreased market price or if it hasn't price, it includes estimation of water resources and objects, and it gives possibility to determine profit, income and advantages and other profit, income and advantages, receivable from using resources of this object.
Concept of appropriate amount is connected with expenses conception. If the appropriate price of water is less, it needs same amount for compensation economic losses on preserving such resources. In practice such method is used for measuring "Storage price".
Concept of total economic value (amount) on price formation in water economy (TOTAL ECONOMIC VALUE). This conception expresses complex method
on estimation water resources and not only correct functions of resources, but also assimilating functions, learning efforts to estimation water services.
Amount total economic value consists of following indexes:
YHKcp = $Kcpi + $Kcpo (1)
YHK^p - is amount (value) of water resources;
OKCP1 - used amount value) of water resources;
OKCP0 - unused amount value) of water resources; <D»Cpi = T (B) ^ + Э (E) ^ + KM^p (2)
T (E) KCP - amount (value) of straight (direct) using of water resources;
Э (E) K^p - amount (value) of curve (indirect) using of water resources;
KMKCp - late corresponding amount (value) of water resources.
HfcKcp = M (E)^p (3)
HOKCP - non using amount (value) of water resources;
M (E)KCp - existing amount (value) of water resources.
Taking into account above stated, if we make corresponding mathematic calculations, we will have following final formula: YHKcp = T (E) Kcp + Э (E) Kcp + KMK^ + KEK^ (4)
Let us view each of them. Use value (amount) or consumer value is value (amount) arising from net profit taken from these resources. It consists of adding straight (direct) using amount, curve (indirect) using amount and late corresponding values. Direct use value consists of eco-logic value (amount), taken from direct using object or resource, or direct use value (amount). Indirect value of using is used in global or wide enough regional aspect and tries notice profits for wider region. It is expressed with possibility of mutual disparity of global and local profit. Some objects, unprofitable for some regions or country may be vitally necessary for other countries and our planet. It includes regulating climate, protection water storing basins, fulfillment sanitary functions. Late (deferred, delayed, possible done) option value means individual readiness for payment to take effective with purpose of using flora and fauna with its residence places or preserving ecologic object. That means we must think about conservation resources for using it in future. In this case level of possible value consists of sum of direct and indirect potential (corrected) used amounts. Such form of value (amount) is like insurance value (amount). Non-use value or "Passive use" value is based on existing value of economic estimation of aesthetic aspects, that means value of nature, aesthetic nature for human, duty on nature
preserving against future generation, cultural value and so on. On estimation value of such amount we use reductive economic methods based on subjective estimation, theory of "readiness to pay" and soon. Amount of existence value is an unusable value and proves existence of resource, it didn't connected with value of current or late using and comes from existence of any ecologic resources. As example of exiting value, even they didn't see it, it can show people's attitude to protect blue whale. Due to that, existence value is expressed by full readiness preserve flora, fauna and their habitat, even if they never use these resources. In some cases, this value can also include inheritance value. Main source of existence value is own attitude of generation, friends, relatives, human and nature. One of
the most effective methods for estimation late using and existing amount (value) is subjective money estimation. For example, on determining existence amount (value) of protection tropical forests, maximizes utility in the condition of limiting profits by choosing market and nonmarket domestic goods. If one of the nonmarket gods is known as social goods under name "protection tropical forest", in this case, readiness for paying for these "goods" turns to price of forest protection, price of other goods, function of intention price ofprofits and members ofhousekeeping. Manner of housekeeping on this matter is formed with several social economic factors such as number of family members, their age, education, belonging to party and attitude of family members to environment.
References:
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4. Author's calculations based on information from the Ministry ofAgriculture and Water Resources of the Republic of Uzbekistan. URL: http: www.agro.uz
5. 22nd OSCE Economic and Environmental Forum "Responding to environmental challenges with a view to promoting cooperation and security in the OSCE area" CONCLUDING MEETING Prague, - 10-12 September - 2014. Opening Session Uzbekistan. EEF. DEL/32/14 10 September - 2014. Original: Russian URL: http: www.gov.uz/ru/press/politics/25860
6. Tax Committee of the Republic of Uzbekistan. URL: http: www.soliq.uz
7. See more detailed information in "Economy ofwater resources" by A. Sultonov Z. Khudoyberganov S. Quchqorova.
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