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Distributing water's bounty

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  • Griffin, Ronald C.
  • Mjelde, James W.

Abstract

Following an investigation of theoretical issues and an inventory of modeling requirements, support for increasing block rates is examined empirically, through comparison to a uniform rate that includes scarce water value. Using a single-year, monthly simulation model, it is found that under conditions of scarcity, households using smaller amounts of water are better off with a uniform rate than an increasing block. Large water users have opposing preferences. Similar results arise for those household characteristics which are correlated with water use, such as income, property value, number of residents, and outdoor area of the property. For example, low-income households prefer scarcity-inclusive uniform rates over increasing block rates when scarcity is present. Therefore, in contrast to popularized opinion, increasing block rates do not place the welfare burden of conservation on large water users, nor do such rates favor low-income people in scarce-water circumstances.

Suggested Citation

  • Griffin, Ronald C. & Mjelde, James W., 2011. "Distributing water's bounty," Ecological Economics, Elsevier, vol. 72(C), pages 116-128.
    • Handle: RePEc:eee:ecolec:v:72:y:2011:i:c:p:116-128
    DOI: 10.1016/j.ecolecon.2011.09.013
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    2. R. Quentin Grafton, 2017. "Responding to the ‘Wicked Problem’ of Water Insecurity," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(10), pages 3023-3041, August.
    3. Rita Martins & Luis Cruz & Eduardo Barata, 2013. "Water Price Regulation: A Review of Portuguese Tariff Recommendations," Public Organization Review, Springer, vol. 13(2), pages 197-205, June.
    4. Epiphane Assouan & Tina Rambonilaza & Bénédicte Rulleau, 2018. "Renewal of water-related infrastructure and user\'s contribution: a few benchmarks," Cahiers du GREThA (2007-2019) 2018-19, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    5. Pinto, Francisco Silva & Marques, Rui Cuhna, 2015. "Tariff recommendations: A Panacea for the Portuguese water sector?," Utilities Policy, Elsevier, vol. 34(C), pages 36-44.
    6. Sowby, Robert B. & South, Andrew J., 2023. "Innovative water rates as a policy tool for drought response: Two case studies from Utah, USA," Utilities Policy, Elsevier, vol. 82(C).
    7. Ronald C. Griffin, 2012. "The Origins and Ideals of Water Resource Economics in the United States," Annual Review of Resource Economics, Annual Reviews, vol. 4(1), pages 353-377, August.

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