Cost recovery is a key tenet of the Water Framework Directive, but scalar implications of this in the domestic water sector are rarely addressed. It is more expensive to supply water services to rural populations owing to cost of provision across areas which are extensive yet sparsely populated; however, residents in rural areas often have lower incomes than urban populations. Taking the case of Portugal, the paper shows that, under conditions of cost recovery, prices will increase for populations in rural areas, a situation which is likely to worsen in future given out-migration from these areas. The discussion has a broader bearing on issues of even regional development and can contribute to a general understanding of how forming water policies in times of demographic change can be addressed from a policy and governance perspective.

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