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Revenue neutral water conservation: Marginal cost pricing with discount coupons
Author(s) -
Collinge Robert A.
Publication year - 1992
Publication title -
water resources research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.863
H-Index - 217
eISSN - 1944-7973
pISSN - 0043-1397
DOI - 10.1029/91wr02827
Subject(s) - marginal cost , marginal value , marginal utility , water pricing , revenue , marginal revenue , microeconomics , economics , value (mathematics) , discounting , agency (philosophy) , water conservation , environmental economics , product (mathematics) , marginal product , willingness to pay , business , production (economics) , computer science , finance , water resources , mathematics , ecology , philosophy , epistemology , machine learning , biology , geometry
This paper points out how a system of marketable discount coupons applied to the sale of water by an agency can satisfy both redistributional and revenue constraints without compromise to economic efficiency, in effect creating marketable multipart pricing. This procedure achieves marginal cost pricing for each user while decreasing the average consumer's expenditures on water. Efficiency would obtain both in allocation among users and in overall usage. No information on consumer demand for water is required. A useful by‐product is market revelation of the marginal value of incremental water usage, thereby also shedding light on the value of incremental water projects.