facilities related to flood control are thought to be a kind of public good that should be supplied by the governments. Subsidies for sewage water are justified because sewerage systems are also public goods that promote public hygiene, flood control, and water conservation. In addition,
subsidies for agricultural water are needed to provide for the development of the agricultural economy and a stable supply of food in Japan. Most Japanese farms could not compete with foreign countries without these subsidies.
National and local governments bear most of the expenses for flood control and sewerage works, while they bear only a part of the expenses for domestic and industrial water supply. Operation, maintenance and management costs of existing facilities for flood control such as dams and waterworks are also borne by governments, because beneficiaries are the general public and it is hard to identify (and tax) individual beneficiaries. These subsides have been the main driving force promoting new water resources development, because most local governments can not afford to make these investments with only their own financial resources. On the other hand, the perational, maintenance and management (O & M) costs of water treatment facilities are usually borne by the users. In general, all operational costs of sewerage, domestic and industrial water utilities are borne by their users (water charges).