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Pricing Sydney water


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  • R. Quentin Grafton
  • Tom Kompas


The paper estimates an aggregate daily water demand for Sydney using rainfall, temperature, and price data from 2001 to 2005, and a dummy variable to account for reductions in demand following the introduction of water restrictions in October 2003. Analyses based on the estimated price elasticity, and also values one and two standard errors above and below this estimate, are used to model the effects of different pricing and water supply scenarios. The simulations indicate that without a fundamental change in water policy (pricing and supply) Sydney faces the possibility of critical water shortages in the short- to medium-term should there be a continuation of low rainfall events. Copyright 2007 The Authors Journal compilation 2007 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd .

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Bibliographic Info

Article provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.

Volume (Year): 51 (2007)
Issue (Month): 3 (09)
Pages: 227-241

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Handle: RePEc:bla:ajarec:v:51:y:2007:i:3:p:227-241

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Cited by:
  1. Emma Aisbett & Ralf Steinhauser, 2011. "Maintaining the Common Pool: Voluntary Water Conservation in Response to Increasing Scarcity," Crawford School Research Papers 1111, Crawford School of Public Policy, The Australian National University.
  2. Steven Renzetti, 2009. "Wave of the Future: The Case for Smarter Water," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 281, February.
  3. Emma Aisbett & Ralf Steinhauser, 2011. "Does anybody give a dam? The importance of public awareness for urban water conservation during drought," Environmental Economics Research Hub Research Reports 10100, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
  4. R. Quentin Grafton & Michael B. Ward, 2010. "Dynamically Efficient Urban Water Policy," Centre for Water Economics, Environment and Policy Papers 1013, Centre for Water Economics, Environment and Policy, Crawford School of Public Policy, The Australian National University.
  5. Freebairn, John W., 2012. "Risk Aversion and Urban Water Decisions," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 124206, Australian Agricultural and Resource Economics Society.
  6. Henrique Monteiro, 2010. "Residential Water Demand in Portugal: checking for efficiency-based justifications for increasing block tariffs," Working Papers Series 1 ercwp0110, ISCTE-IUL, Business Research Unit (BRU-IUL).


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