Premium
Estimating stakeholder benefits of community water system regionalization
Author(s) -
Hansen Jason K.
Publication year - 2013
Publication title -
journal ‐ american water works association
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.466
H-Index - 74
eISSN - 1551-8833
pISSN - 0003-150X
DOI - 10.5942/jawwa.2013.105.0105
Subject(s) - stakeholder , welfare , business , stakeholder theory , economics , scale (ratio) , economies of scale , natural resource economics , social benefits , public economics , environmental economics , environmental resource management , marketing , market economy , geography , cartography , management , materials science , tailings , metallurgy
Community water system regionalization (CWSR) provides small community water systems with a solution to the conundrum of large fixed costs and a small rate base. In practice, however, very few systems actually regionalize. Applying social welfare theory, this article estimates stakeholder benefits from CWSR. Results are reported for three New Mexico communities as case studies in which CWSR was hypothetically imposed. Benefits for consumers are non‐negative across price scenarios, but in some cases producer benefits are negative. The findings suggest that reluctance to regionalize is not in consumers' economic interest, but it may be for producers. Depending on the water price that follows CWSR and savings achieved by economies of scale, consumers gain at producers' expense. The results shed light on issues that policymakers should consider when evaluating the merits of CWSR. Producers' historic reluctance to adopt CWSR may in fact be driven by economics.