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Distributing water's bounty

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  • Griffin, Ronald C.
  • Mjelde, James W.
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    Abstract

    Following an investigation of theoretical issues and an inventory of modeling requirements, support for increasing block rates is examined empirically, through comparison to a uniform rate that includes scarce water value. Using a single-year, monthly simulation model, it is found that under conditions of scarcity, households using smaller amounts of water are better off with a uniform rate than an increasing block. Large water users have opposing preferences. Similar results arise for those household characteristics which are correlated with water use, such as income, property value, number of residents, and outdoor area of the property. For example, low-income households prefer scarcity-inclusive uniform rates over increasing block rates when scarcity is present. Therefore, in contrast to popularized opinion, increasing block rates do not place the welfare burden of conservation on large water users, nor do such rates favor low-income people in scarce-water circumstances.

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    Bibliographic Info

    Article provided by Elsevier in its journal Ecological Economics.

    Volume (Year): 72 (2011)
    Issue (Month): C ()
    Pages: 116-128

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    Handle: RePEc:eee:ecolec:v:72:y:2011:i:c:p:116-128

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    Web page: http://www.elsevier.com/locate/ecolecon

    Related research

    Keywords: Water rates; Water pricing; Block rates; Uniform rates; Water conservation;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. S. Gaudin, 2006. "Effect of price information on residential water demand," Applied Economics, Taylor & Francis Journals, vol. 38(4), pages 383-393.
    2. Wu, Ximing & Perloff, Jeffrey M., 2007. "GMM estimation of a maximum entropy distribution with interval data," Journal of Econometrics, Elsevier, vol. 138(2), pages 532-546, June.
    3. Geoff Edwards, 2006. "Whose Values Count? Demand Management for Melbourne's Water," The Economic Record, The Economic Society of Australia, vol. 82(s1), pages S54-S63, 09.
    4. Bithas, Kostas, 2008. "The sustainable residential water use: Sustainability, efficiency and social equity. The European experience," Ecological Economics, Elsevier, vol. 68(1-2), pages 221-229, December.
    5. Richardson, James W. & Klose, Steven L. & Gray, Allan W., 2000. "An Applied Procedure For Estimating And Simulating Multivariate Empirical (Mve) Probability Distributions In Farm-Level Risk Assessment And Policy Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(02), August.
    6. Hugh Sibly, 2006. "Efficient Urban Water Pricing," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 39(2), pages 227-237, 06.
    7. R. Quentin Grafton & Michael B. Ward, 2008. "Prices versus Rationing: Marshallian Surplus and Mandatory Water Restrictions," The Economic Record, The Economic Society of Australia, vol. 84(s1), pages S57-S65, 09.
    8. Sylvestre Gaudin & Ronald C. Griffin & Robin C. Sickles, 2001. "Demand Specification for Municipal Water Management: Evaluation of the Stone-Geary Form," Land Economics, University of Wisconsin Press, vol. 77(3), pages 399-422.
    9. Ronald C. Griffin & James W. Mjelde, 2000. "Valuing Water Supply Reliability," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 414-426.
    10. Jasper M. Dalhuisen & Raymond J. G. M. Florax & JHenri L. F. de Groot & Peter Nijkamp, 2003. "Price and Income Elasticities of Residential Water Demand: A Meta-Analysis," Land Economics, University of Wisconsin Press, vol. 79(2), pages 292-308.
    11. R. Quentin Grafton & Michael B. Ward & Hang To & Tom Kompas, 2011. "Determinants of Residential Water Consumption: Evidence and Analysis from a Ten-country Household Survey," Crawford School Research Papers 1114, Crawford School of Public Policy, The Australian National University.
    12. Ronald C. Griffin, 2006. "Water Resource Economics: The Analysis of Scarcity, Policies, and Projects," MIT Press Books, The MIT Press, edition 1, volume 1, number 026207267x, December.
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    Cited by:
    1. Rita Martins & Luis Cruz & Eduardo Barata, 2013. "Water Price Regulation: A Review of Portuguese Tariff Recommendations," Public Organization Review, Springer, vol. 13(2), pages 197-205, June.
    2. Ronald C. Griffin, 2012. "The Origins and Ideals of Water Resource Economics in the United States," Annual Review of Resource Economics, Annual Reviews, vol. 4(1), pages 353-377, 08.

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