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The Demand for Water: Consumer Response to Scarcity

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  • Krause, Kate
  • Chermak, Janie M
  • Brookshire, David S

Abstract

Provision of water raises several issues for municipal utility companies and other suppliers, including reliability of supply in arid regions or during droughts, equity issues that arise because water is literally a necessity, and heterogeneity in consumer response to regulatory policy. We combine experimental and survey responses to investigate demand for water. The experiments simulate water consumption from a potentially exhaustible source, revealing heterogeneous demand for water. We estimate econometrically water demand for different consumer groups. A regulator could use estimates of disaggregated demand to attain conservation goals by designing an incentive compatible pricing system. The example given achieves a conservation goal while minimizing enforcement costs and welfare loss. Copyright 2003 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 23 (2003)
Issue (Month): 2 (March)
Pages: 167-91

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Handle: RePEc:kap:regeco:v:23:y:2003:i:2:p:167-91

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Web page: http://www.springerlink.com/link.asp?id=100298

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Cited by:
  1. Mansur, Erin T. & Olmstead, Sheila M., 2006. "The Value of Scarce Water: Measuring the Inefficiency of Municipal Regulations," Working paper 228, Regulation2point0.
  2. Sheila M. Olmstead, 2010. "The Economics of Managing Scarce Water Resources," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(2), pages 179-198, Summer.
  3. Vossler, Christian A. & Suter, Jordan F. & Poe, Gregory L., 2013. "Experimental evidence on dynamic pollution tax policies," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 101-115.
  4. Arbues, Fernando & VillanuĀ“a, Inmaculada & Barberan, Ramon, 2010. "Household size and residential water demand: an empirical approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), March.
  5. Ruijs, A. & Zimmermann, A. & van den Berg, M., 2008. "Demand and distributional effects of water pricing policies," Ecological Economics, Elsevier, vol. 66(2-3), pages 506-516, June.
  6. Dupont, Diane P., 2011. "Reclaimed Wastewater and the WTP to avoid Summer Water Restrictions: Incorporation Endogenous Free-riding Beliefs," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108778, Agricultural Economics Society.
  7. Olmstead, Sheila & Stavins, Robert, 2008. "Comparing Price and Non-Price Approaches to Urban Water Conservation," Working Paper Series rwp08-034, Harvard University, John F. Kennedy School of Government.
  8. Hans-Theo Normann & Roberto Ricciuti, 2009. "Laboratory Experiments For Economic Policy Making," Journal of Economic Surveys, Wiley Blackwell, vol. 23(3), pages 407-432, 07.
  9. Ward, John & Tisdell, John G. & Whitten, Stuart M., 2006. "Experimentally Testing Institutions And Policy Instruments To Coordinate Groundwater Recharge in the Coleambally Irrigation Area," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 139923, Australian Agricultural and Resource Economics Society.
  10. 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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