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VALUING URBAN WATER ACQUISITIONS 1
Author(s) -
Griffin Ronald C.
Publication year - 1990
Publication title -
jawra journal of the american water resources association
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.957
H-Index - 105
eISSN - 1752-1688
pISSN - 1093-474X
DOI - 10.1111/j.1752-1688.1990.tb01364.x
Subject(s) - water supply , natural resource economics , population , acre , economic surplus , distribution (mathematics) , population growth , agricultural economics , environmental science , value (mathematics) , water resource management , scarcity , economics , business , environmental engineering , agricultural science , microeconomics , mathematics , statistics , market economy , demography , sociology , welfare , mathematical analysis
Municipalities typically seek additional water supplies whenever prospective population and economic growth suggests the inadequacy of currently available water supply. The benefit of supply enhancement is usually construed as avoiding debilitating water scarcity. A more effective approach to planning is to compare the benefits and costs of supply augmentation. The net present value of benefits for a supply increase in a representative Texas community is calculated for alternative scenarios relating to population growth, rate growth, and the temporal distribution of the increased supply. Consumer surplus measures are sensitive to all three of these factors and vary from $0 to over $4000 per acre‐foot. A notable finding is that the added supply may offer zero values in cases where real water prices increase at an annualized rate of 4 percent (or greater) which is half the rate occurring in Texas from 1981–1985.