Welfare and Distribution Effects of Water Pricing Policies

Ruijs, Arjan

doi:10.2139/ssrn.1017476

Cited by 21 publications

(13 citation statements)

References 70 publications

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“…Depending on the way water is perceived and the societal structure, different payment and subsidy systems have been used. Welfare effects of block tariffs and flat rates have been investigated in Mauritius (Madhoo, 2011), São Paulo (Ruijs, 2007) and Manaus (Olivier, 2010), while Gomez-Lobo et al (2000) considered water-subsidy schemes in Latin America. Gawel et al (2013) compared different approaches to measure affordability.…”

Section: Introductionmentioning

confidence: 99%

The transformative effect of the introduction of water volumetric billing in a disadvantaged housing area in Sweden

Mangold¹,

Morrison²,

Harder³

et al. 2014

Water Policy

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Domestic water payment schemes are often a product of their time, place and what is perceived to be customary. Aspects that payment schemes can take into account include resource conservation, equity, maintainability, and profitability. In contemporary Sweden profitable environmentally sustainable solutions are promoted, such as the introduction of volumetric billing of water in rental apartments. This paper describes the detailed consequences of this change in the payment structure for domestic water in terms of reduced resource consumption, direct impact on household economies and perceptions of the system's change process. By combining high-resolution quantitative data on water usage and socio-economic household characteristics with qualitative data from semistandardized interviews with residents, it is possible to identify the different impacts of the system's change and how the process was experienced. It was shown that while water usage decreased by 30%, 63% of the households had increased monthly costs, and unemployed residents were further disadvantaged and closer to social exclusion. Focusing on making environmental sustainability profitable, as posited in ecological modernization theory, may shadow negative impacts on social sustainability.

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Section: Introductionmentioning

confidence: 99%

The transformative effect of the introduction of water volumetric billing in a disadvantaged housing area in Sweden

Mangold¹,

Morrison²,

Harder³

et al. 2014

Water Policy

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show abstract

“…However, due to the complexities of the regulatory process involved in setting water price levels and water tariff structures, water charges may not end up being equitably distributed among income groups and access to even basic amounts of water might be very unequal among even citizens of the same country (e. g. Ruijs et al, 2008;Ruijs, 2009). In fact, water affordability is a significant problem in both developed and developing countries.…”

Section: Introductionmentioning

confidence: 99%

Affordability of residential water tariffs: Alternative measurement and explanatory factors in southern Spain

García-Valiñas

Martı́nez-Espiñeira

González‐Gómez

2010

Journal of Environmental Management

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“…Chipman and Moore (1980) showed that CV adequately compares alternative pricing policies in the case of homothetic preferences and changes in price but not in income. However, as discussed by Ruijs (2009), a change in price also generates changes in virtual income when analyzing the effects of alternative IBR tariffs.…”

Section: Demand and Welfare Estimation Under Non-linear Pricingmentioning

confidence: 99%

Can Allocation-Based Water Rates Promote Conservation and Increase Welfare? A California Case Study

Baerenklau

Pérez-Urdiales

2019

Water Econs. Policy

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An allocation-based rate (ABR) is a special type of increasing block rate (IBR) price structure that is receiving increased attention from urban water suppliers in places like California where population growth and climate change continue to increase water scarcity. Previous work by Baerenklau et al. [Baerenklau, KA, KA Schwabe and A Dinar (2014a). Allocation-based water pricing promotes conservation while keeping user costs low. Agricultural and Resource Economics Update, 17(6), 1–14; Baerenklau, KA, KA Schwabe and A Dinar (2014b). The residential water demand effect of increasing block rate water budgets. Land Economics, 90(4), 683–699.] investigates the conservation potential of ABR and finds that consumption under ABR was 10–15% below that of a comparable uniform rate structure for a southern California case study. This paper extends that work by using the discrete–continuous choice framework to estimate household-level welfare effects of ABR for the same dataset. We find that despite the observed decrease in consumption, average household welfare actually increased under ABR due to its non-linear structure. We also find that similar results would have been achievable with a simpler standard IBR structure. While either of these block rate structures is welfare-preferred to uniform price and quantity instruments, neither clearly dominates the other.

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Welfare and Distribution Effects of Water Pricing Policies

Cited by 21 publications

References 70 publications

The transformative effect of the introduction of water volumetric billing in a disadvantaged housing area in Sweden

The transformative effect of the introduction of water volumetric billing in a disadvantaged housing area in Sweden

Affordability of residential water tariffs: Alternative measurement and explanatory factors in southern Spain

Can Allocation-Based Water Rates Promote Conservation and Increase Welfare? A California Case Study

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