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Pricing Sydney water

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  • Grafton, R. Quentin
  • Kompas, Tom

Abstract

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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Suggested Citation

  • Grafton, R. Quentin & Kompas, Tom, 2002. "Pricing Sydney water," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(3), September.
  • Handle: RePEc:ags:aareaj:118330
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    References listed on IDEAS

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    1. Crase, Lin & Dollery, Brian, 2006. "Water rights: a comparison of the impacts of urban and irrigation reforms in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(3), September.
    2. Productivity Commission, 2006. "Rural Water Use and the Environment: The Role of Market Mechanisms," Research Reports, Productivity Commission, Government of Australia, number 21.
    3. 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.
    4. Mark Hoffmann & Andrew Worthington & Helen Higgs, 2006. "Urban water demand with fixed volumetric charging in a large municipality: the case of Brisbane, Australia ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(3), pages 347-359, September.
    5. Quiggin, John, 2006. "Urban water supply in Australia: the option of diverting water from irrigation," Risk and Sustainable Management Group Working Papers 149857, University of Queensland, School of Economics.
    6. Tresch, Richard W. & Tresch, Richard W., 2002. "Public Finance," Elsevier Monographs, Elsevier, edition 2, number 9780126990515.
    7. Renzetti, Steven, 1992. "Evaluating the welfare effects of reforming municipal water prices," Journal of Environmental Economics and Management, Elsevier, vol. 22(2), pages 147-163, March.
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    Citations

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    Cited by:

    1. Lin Crase & Suzanne O’Keefe & Brian Dollery, 2008. "Can Urban Water Markets Work? Some Concerns," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 15(3), pages 73-82.
    2. Productivity Commission, 2008. "Towards Urban Water Reform: A Discussion Paper," Research Papers 0801, Productivity Commission, Government of Australia.
    3. Hugh Sibly & Richard Tooth, 2008. "Bringing competition to urban water supply ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(3), pages 217-233, September.
    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. Grafton, R. Quentin & Chu, Long & Kompas, Tom, 2015. "Optimal water tariffs and supply augmentation for cost-of-service regulated water utilities," Utilities Policy, Elsevier, vol. 34(C), pages 54-62.
    6. Wheeler, Sarah Ann & Bjornlund, Henning & Shanahan, Martin & Zuo, Alec, 2008. "Price elasticity of water allocations demand in the Goulburn–Murray Irrigation District," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(1), March.
    7. World Bank [WB], 2016. "High and Dry : Climate Change, Water, and the Economy," Working Papers id:10736, eSocialSciences.
    8. Emma Aisbett & Ralf Steinhauser, 2014. "Maintaining the Common Pool: Voluntary Water Conservation in Response to Varying Scarcity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(2), pages 167-185, October.
    9. Barker, Andrew & Murray, Tim & Salerian, John, 2010. "Developing a Partial Equilibrium Model of an Urban Water System," Staff Working Papers 102, Productivity Commission, Government of Australia.
    10. Aisbett, Emma & Steinhauser, Ralf, 2011. "Does anybody give a dam? The importance of public awareness for urban water conservation during drought," Research Reports 107850, Australian National University, Environmental Economics Research Hub.
    11. 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).
    12. 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.
    13. Neal Hughes & Ahmed Hafi & Tim Goesch, 2009. "Urban water management: optimal price and investment policy under climate variability ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(2), pages 175-192, April.
    14. repec:bla:econpa:v:36:y:2017:i:3:p:289-299 is not listed on IDEAS
    15. Steven Renzetti, 2009. "Wave of the Future: The Case for Smarter Water," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 281, February.
    16. Wang, Hua & Xie, Jian & Li, Honglin, 2008. "Domestic water pricing with household surveys : a study of acceptability and willingness to pay in Chongqing, China," Policy Research Working Paper Series 4690, The World Bank.
    17. 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 57-65, September.
    18. 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.

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    Resource /Energy Economics and Policy;

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