When appropriately set, w'ater tariffs and abstraction charges can inform abstractors about the value of w'ater and provide incentives to use water efficiently, including in episodes of droughts. They can also provide incentives to direct economic and urban developments in regions where water is more abundant, avoiding creating additional liabilities as regards water security (See Box 3.5). Well-designed water tariffs and abstraction charges can also stimulate innovation and private sector investments (in water-saving technologies and practices or in water storage) and allocate water where it creates more (social, environmental and economic) value.