Municipal Water Supply and Sewage Treatment: Costs, Prices and Distortions
Municipal water supply and sewage treatment utilities in Ontario, Canada, are studied in order to establish their costs of supply and evaluate their pricing practices. Prices charged to residential and commercial customers are found to be only one-third and one-sixth of the estimated marginal cost for water supply and sewage treatment, respectively. For example, the average price to residential customers is $0.32m[superscript 3], while the estimated marginal cost is $0.87/m[superscript 3]. The estimated cost parameters are combined with estimated residential and nonresidential demands functions in order to calculate approximate welfare losses that arise from overconsumption.
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Volume (Year): 32 (1999)
Issue (Month): 3 (May)
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References listed on IDEAS
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- Lars Gårn Hansen, 1996. "Water and Energy Price Impacts on Residential Water Demand in Copenhagen," Land Economics, University of Wisconsin Press, vol. 72(1), pages 66-79.
- Fraas, Arthur G. & Munley, Vincent G., 1984. "Municipal wastewater treatment cost," Journal of Environmental Economics and Management, Elsevier, vol. 11(1), pages 28-38, March.
- Boisvert, Richard N. & Schmit, Todd M., 1997. "Tradeoff Between Economies Of Size In Treatment And Diseconomies Of Distribution For Rural Water Systems," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 26(2), October.
- Kim, H Youn, 1987. "Economies of Scale in Multi-product Firms: An Empirical Analysis," Economica, London School of Economics and Political Science, vol. 54(214), pages 185-206, May.
- 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.
- Swallow, Stephen K. & Marin, Carlos M., 1988. "Long run price inflexibility and efficiency loss for municipal water supply," Journal of Environmental Economics and Management, Elsevier, vol. 15(2), pages 233-247, June.
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