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The Water Authority will be raising prices toward the end of the year and change the way prices are calculated by adding a third and most expensive price level.

The authority said yesterday the hike would fund the cost of developing water-production facilities and pipelines and to encourage all consumers to save more water.

The third price level is also intended as an alternative to reimposing the so-called drought tax, which has been suspended for the time being. Under the varying price levels, price rises accelerate as more water is used.

The cost for water at the new highest rate has not yet been announced.

An overall rise in water prices is also in the offing, of between 2 percent to 4 percent to offset the construction of the new facilities; most of the construction is by the Mekorot water company.

All price changes require the approval of the Water Authority and the relevant government ministries.

Water prices have already gone up this year by more than 30 percent. They were to have risen by 45 percent in one fell swoop, but following pressure by the Infrastructure Ministry, the Water Authority agreed to raise prices in three phases.

Also, to deal with what is expected to be another rain-poor winter, the Water Authority said it was cutting allocations to agriculture of water from natural sources (as opposed to desalinated water ) by 80 million cubic meters. This year farmers received 430 million cubic meters from natural sources.

According to a policy document issued Tuesday by environmental groups, water allocation to farming can be reduced to 300 million cubic meters by economizing and recycling purified waste water.

However, according to a senior adviser to the Water Authority, Dr. Yossi Dreisen, more than half the water from natural sources is used in the Galilee, where there is no waste-water alternative and there is not enough desalinated water.

Dreisen said purified waste water cannot be used in certain other areas of the country for health and environmental reasons - there are prohibitions against using purified waste water near communities.

In those places as well, farmers must use water from natural sources.

The Water Authority said yesterday the country is more prepared than in previous years for a drought year. The water supply has been augmented by an additional 180 million cubic meters of desalinated water and domestic use has declined as consumers have been encouraged to save water.