Premium
Urban water pricing and drought management
Author(s) -
Moncur James E. T.
Publication year - 1987
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/wr023i003p00393
Subject(s) - nonmarket forces , water conservation , water supply , economics , water use , marginal cost , agricultural economics , environmental science , water resources , water resource management , microeconomics , ecology , environmental engineering , biology , factor market
In periods of drought, urban water systems commonly rely on nonmarket programs to induce temporary conservation, leaving the marginal price of water unchanged; an alternative is to raise the price. Using pooled cross‐sectional and time series observations on single‐family residential customers of the Honolulu Board of Water Supply (1982), demand for water is estimated as a function of price, income, household size, rainfall, and a dummy variable denoting a water restrictions program. Short‐run elasticities suggest that an increase in marginal price of less than 40% would achieve a 10% reduction in water use, even during a drought episode. An accompanying conservation program would mitigate the necessary price increase, but only slightly.