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Pricing Sydney water *
Author(s) -
Grafton R. Quentin,
Kompas Tom
Publication year - 2007
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/j.1467-8489.2007.00390.x
Subject(s) - water pricing , economic shortage , economics , econometrics , continuation , price elasticity of demand , environmental science , elasticity (physics) , variable (mathematics) , water supply , water resources , mathematics , microeconomics , environmental engineering , water conservation , computer science , thermodynamics , ecology , mathematical analysis , biology , programming language , linguistics , philosophy , physics , government (linguistics)
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.