Transferable Rate Entitlements: the Overlooked Opportunity in Municipal Water Pricing

Collinge, Robert A.

doi:10.1177/109114219402200103

Cited by 14 publications

(14 citation statements)

References 17 publications

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“…More closely related to our work, Collinge (1994) proposes a theoretical municipal water entitlement transfer system. An experimental study simulates water consumption from a common pool and predicts that customer heterogeneity will generate welfare losses from command-and-control urban water conservation policies (Krause et al, 2003).…”

Section: Related Literaturementioning

confidence: 99%

The value of scarce water: Measuring the inefficiency of municipal regulations

Mansur

Olmstead

2012

Journal of Urban Economics

128

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Keywords: Drought policy Increasing-block price Market-based regulation Urban water demand Water price Water restriction a b s t r a c t Rather than allowing urban water prices to reflect scarcity rents during periods of drought-induced excess demand, policy makers have mandated command-and-control approaches, primarily rationing the use of water outdoors. While such policies are ubiquitous and likely inefficient, economists have not had access to sufficient data to estimate their economic impact. Using unique panel data on residential end-uses of water in 11 North American cities, we examine the welfare implications of urban water rationing in response to drought. Using estimates of expected marginal prices that vary both across and within markets, we estimate price elasticities specific to indoor and outdoor water use. Our results suggest that current policies do target water uses that households, themselves, are most willing to forgo. Nevertheless, we find that rationing outdoor water in cities has costly welfare implications, primarily due to household heterogeneity in willingness-to-pay for scarce water. We find that replacing rationing policies with a market-clearing ''drought price'' would result in welfare gains of more than 29% of what households in the sample spend each year on water.

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Section: Related Literaturementioning

confidence: 99%

The value of scarce water: Measuring the inefficiency of municipal regulations

Mansur

Olmstead

2012

Journal of Urban Economics

128

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“…Collinge (1994) proposes a theoretical water entitlement transfer system similar to the municipal-level…”

Section: Price and Non-price Water Regulationmentioning

confidence: 99%

The Value of Scarce Water: Measuring the Inefficiency of Municipal Regulations

Mansur

Olmstead

2007

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Rather than allowing water prices to reflect scarcity rents during periods of drought-induced excess demand, policy makers have mandated command-and-control approaches, like the curtailment of certain uses, primarily outdoor watering. Using unique panel data on residential end-uses of water, we examine the welfare implications of typical drought policies. Using price variation across and within markets, we identify end-use specific price elasticities. Our results suggest that current policies target water uses that households, themselves, are most willing to forgo. Nevertheless, we find that use restrictions have costly welfare implications, primarily due to household heterogeneity in willingness-to-pay for scarce water.

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“…Recent studies show that policies based on increasing the price, instead of imposing water use restrictions, significantly reduce the economic cost of achieving the desirable reduced use (Collinge 1994;Krause et al 2003;Brennan et al 2007). …”

Section: Policies To Achieve Conservative Consumptionmentioning

confidence: 98%

Basic principles for urban water value assessment and price setting towards its full cost recovery – pinpointing the role of the water losses

Kanakoudis

Gonelas

Tolikas

2011

Journal of Water Supply: Research and Technology-Aqua

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This paper attempts to set the basic methodological framework for an integrated action plan (in terms of successive steps) to be developed that will guarantee the reliable calculation of the Full Water Cost (FWC), as defined by the WFD 2000/60/EC. Towards this goal, the crucial role of the water losses occurring in a water distribution system is demonstrated. This will help an effective and socially just water pricing policy to be developed. The cost components (direct -DC; environmental -EC; and resource -RC) comprising the FWC are analysed, introducing approaches for their reliable calculation. Regarding the DC, the marginal capacity cost and the necessary preconditions for its integration to the final water price along with its contribution towards effective water demand reduction are analysed. Regarding the EC, its dynamic character and the ways it interacts with the DC are presented. The role of the stakeholders in setting those price levels is also checked. Crucial parameters are analysed for a socially just water cost allocation to domestic users. The role of the water utility is examined, considering its responsibility in water losses. The basic policies (market-based vs. conventional) used to achieve conservative water use are evaluated. In addition, the role of the State is criticized.

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Transferable Rate Entitlements: the Overlooked Opportunity in Municipal Water Pricing

Cited by 14 publications

References 17 publications

The value of scarce water: Measuring the inefficiency of municipal regulations

The value of scarce water: Measuring the inefficiency of municipal regulations

The Value of Scarce Water: Measuring the Inefficiency of Municipal Regulations

Basic principles for urban water value assessment and price setting towards its full cost recovery – pinpointing the role of the water losses

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