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Tradable water saving certificates to improve urban water use efficiency: an ex‐ante evaluation in a French case study
Author(s) -
Rinaudo JeanDaniel,
Calatrava Javier,
De Byans Marine Vernier
Publication year - 2016
Publication title -
australian journal of agricultural and resource economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 1364-985X
DOI - 10.1111/1467-8489.12132
Subject(s) - ex ante , certificate , water efficiency , externality , environmental economics , water use , water pricing , economics , efficient energy use , microeconomics , water conservation , natural resource economics , water resources , computer science , macroeconomics , engineering , ecology , electrical engineering , algorithm , biology
This paper proposes a system of tradable Water Saving Certificates to improve the efficiency of water allocation between Drinking Water Utilities at river basin level. A market institutional set‐up, inspired from recent policy developments in the energy sector, is proposed. An original analytical price‐endogenous model is developed to simulate trade intensity, equilibrium price and efficiency gains in this urban water market. The economic model is implemented in a French case study using mathematical programming. It is used for conducting an ex‐ante evaluation of trade possibilities and efficiency gains, considering different spatial restrictions aimed at controlling environmental externalities. Our modelling exercise provides evidence of the benefits of the proposed Water Saving Certificate scheme.