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Regulation versus pricing in urban water policy: the case of the Australian National Water Initiative

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  • Joel Byrnes
  • Lin Crase
  • Brian Dollery

Abstract

The Australian National Water Initiative (NWI) builds on the foundations of earlier water reforms, attempts to correct earlier errors in both policy and its implementation, and seeks to better define some of the policy aims with the benefit of hindsight. However, despite the deliberate effort to improve on earlier reforms, the NWI still embodies a significant economic paradox. Although policymakers have shown their faith in the market insofar as allocating water between competing agricultural interests is concerned, they have not shown the same degree of faith in the ability of urban users to respond to price signals. This paper attempts to shed at least some light on this question by examining the responses of a number of State governments across Australia to the NWI. The paper specifically explores the rationale for non-price regulation in the urban context but challenges the long-term viability of this approach. Copyright Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd 2006.

Suggested Citation

  • Joel Byrnes & Lin Crase & Brian Dollery, 2006. "Regulation versus pricing in urban water policy: the case of the Australian National Water Initiative," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(3), pages 437-449, September.
    • Handle: RePEc:bla:ajarec:v:50:y:2006:i:3:p:437-449
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    File URL: http://hdl.handle.net/10.1111/j.1467-8489.2006.00332.x
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    References listed on IDEAS

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    1. Martin L. Weitzman, 1974. "Prices vs. Quantities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(4), pages 477-491.
    2. Mary E. Renwick & Sandra O. Archibald, 1998. "Demand Side Management Policies for Residential Water Use: Who Bears the Conservation Burden?," Land Economics, University of Wisconsin Press, vol. 74(3), pages 343-359.
    3. Martin L. Weitzman, 1977. "Is the Price System or Rationing More Effective in Getting a Commodity to Those Who Need It Most?," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 517-524, Autumn.
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    Cited by:

    1. Byrnes, Joel & Crase, Lin & Dollery, Brian & Villano, Renato, 2010. "The relative economic efficiency of urban water utilities in regional New South Wales and Victoria," Resource and Energy Economics, Elsevier, vol. 32(3), pages 439-455, August.
    2. Zhisong Chen & Huimin Wang & Xiangtong Qi, 2013. "Pricing and Water Resource Allocation Scheme for the South-to-North Water Diversion Project in China," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(5), pages 1457-1472, March.
    3. Productivity Commission, 2008. "Towards Urban Water Reform: A Discussion Paper," Research Papers 0801, Productivity Commission, Government of Australia.
    4. Cooper, Bethany & Crase, Lin & Burton, Michael P., 2010. "Urban Water Restrictions: Attitudes and Avoidance," 2010 Conference (54th), February 10-12, 2010, Adelaide, Australia 58892, Australian Agricultural and Resource Economics Society.
    5. Gareth A S Edwards, 2013. "Shifting Constructions of Scarcity and the Neoliberalization of Australian Water Governance," Environment and Planning A, , vol. 45(8), pages 1873-1890, August.

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