This paper presents the argument that the environmental, social and economic benefits of decentralised systems are such that they should present a serious alternative to centralised systems in existing and future planned urban developments. It will be shown that the combination of technical, social and regulatory factors that influenced the popularity of centralised systems has altered, and that decentralised systems should now be considered as well. The environmental, social and economic advantages and disadvantages of several sustainable watercycle case studies are examined and compared with centralised systems. The studies examined will go from large scale down to designs suitable for typical residential houses on standard urban blocks.
The received theory of externality control, which implicitly assumes that both the social marginal damage and marginal treatment cost schedules will remain fixed during the time any policy is operative, concludes that an effluent tax and an auction of rights to emit pollutants in the amount of a given emissions standard will be equally efficient in meeting that standard. We show that urban growth causes shifts in both schedules. These shifts in turn substantially increase the welfare loss from a fixed effluent tax relative to that from an auction market with a fixed number of licenses.
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