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Policy Note: A Universal Equity–Efficiency Model for Pricing Water

Author

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  • Janice A. Beecher

    (Institute of Public Utilities, Michigan State University, United States)

Abstract

Drawing on theoretical, practical, and normative rationales, the analysis presented here calls for revisiting the prevailing water service paradigm, and the values and frames it reflects. As is increasingly apparent, current pricing policies may not be sufficiently responsive, pragmatic, or durable, particularly in reconciling competing objectives often cast as the equity–efficiency conundrum. Water is a social good that confers both private and public benefits. The proposed universal (all-inclusive) pricing model envisions five concurrent elements: recognize public functionality in cost allocation (scope economies), calibrate a minimum bill to property assessment (capacity value), provide an essential-use allowance for all households (public health), design cost-based rates for variable water usage (resource management), and prohibit disconnection and deploy service limiters instead (water security). The model advances meaningful structural progress toward social equity while comporting with generally accepted principles to fairly allocate costs and send economic price signals where they make sense.

Suggested Citation

  • Janice A. Beecher, 2020. "Policy Note: A Universal Equity–Efficiency Model for Pricing Water," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 6(03), pages 1-29, July.
    • Handle: RePEc:wsi:wepxxx:v:06:y:2020:i:03:n:s2382624x20710010
    DOI: 10.1142/S2382624X20710010
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    Citations

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    Cited by:

    1. Solis, Miriam & Bashar, Samira Binte, 2022. "Social equity implications of advanced water metering infrastructure," Utilities Policy, Elsevier, vol. 79(C).
    2. D'Amore, Gabriella & Landriani, Loris & Lepore, Luigi, 2021. "Ownership and sustainability of Italian water utilities: The stakeholder role," Utilities Policy, Elsevier, vol. 71(C).
    3. Warner, Mildred E. & Zhang, Xue & Rivas, Marcela González, 2020. "Which states and cities protect residents from water shutoffs in the COVID-19 pandemic?," Utilities Policy, Elsevier, vol. 67(C).
    4. Rambonilaza, Tina & Rulleau, Bénédicte & Assouan, Epiphane, 2023. "On sharing the costs of public drinking water infrastructure renewal among users with different preferences," Utilities Policy, Elsevier, vol. 85(C).
    5. Pierce, Gregory & McBride, Justin & Adams, Jacqueline, 2022. "Subsidized or subsidizing? Municipal drinking water service funds in California," Utilities Policy, Elsevier, vol. 79(C).
    6. Jessica J Goddard & Isha Ray & Carolina Balazs, 2021. "Water affordability and human right to water implications in California," PLOS ONE, Public Library of Science, vol. 16(1), pages 1-24, January.
    7. Salazar-Adams, Alejandro, 2021. "The efficiency of post-reform water utilities in Mexico," Utilities Policy, Elsevier, vol. 68(C).
    8. Simeone, Christina E. & Gagnon, Pieter & Cappers, Peter & Satchwell, Andrew, 2023. "The bill alignment test: Identifying trade-offs with residential rate design options," Utilities Policy, Elsevier, vol. 82(C).
    9. Wichman, Casey, 2024. "Efficiency, Equity, and Cost-Recovery Trade-Offs in Municipal Water Pricing," RFF Working Paper Series 24-18, Resources for the Future.

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