IDEAS home Printed from https://ideas.repec.org/p/ags/aare06/174095.html
   My bibliography  Save this paper

The Efficiency And Equity Implications Of Perth’S Inclining Block Urban Water Tariffs

Author

Listed:
  • Brennan, Donna C.

Abstract

Inclining block tariffs, where the unit price is dependent on the volume consumed, are widely used in urban water pricing. These tariffs attempt to satisfy both efficiency and equity goals by providing pricing signals to influence consumption decisions at the margin, whilst making non-discretionary consumption available at a lower cost. In practice, heterogeneity in demand and the water utility’s requirement for cost recovery lead to efficiency and equity trade offs in the design of inclining block tariff schedules. An equilibrium displacement model of Perth residential water demand, which differentiates between consumer groups according to household size and outdoor use characteristics, is used to assess the efficiency and equity implications of the inclining block tariffs charged by the Water Corporation in Western Australia. Alternative pricing options, including a modified inclining block proposal that has recently been recommended by the state economic regulator and an efficient uniform price, are also evaluated. The efficiency costs and income distributional consequences of “over generous” inclining block tariffs are demonstrated.

Suggested Citation

  • Brennan, Donna C., 2006. "The Efficiency And Equity Implications Of Perth’S Inclining Block Urban Water Tariffs," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 174095, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare06:174095
    DOI: 10.22004/ag.econ.174095
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/174095/files/2006_dbrennan.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.174095?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Rude, James & Meilke, Karl D., 2004. "Developing Policy Relevant Agrifood Models," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(2), pages 1-14, August.
    2. Jasper M. Dalhuisen & Raymond J. G. M. Florax & JHenri L. F. de Groot & Peter Nijkamp, 2003. "Price and Income Elasticities of Residential Water Demand: A Meta-Analysis," Land Economics, University of Wisconsin Press, vol. 79(2), pages 292-308.
    3. Arbues, Fernando & Garcia-Valinas, Maria Angeles & Martinez-Espineira, Roberto, 2003. "Estimation of residential water demand: a state-of-the-art review," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(1), pages 81-102, March.
    4. Piggott, Roley R. & Parton, Kevin A. & Treadgold, Elaine M. & Hutabarat, Budiman, 1993. "Food Price Policy in Indonesia," Monographs, Australian Centre for International Agricultural Research, number 118694.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liang Lu & David Deller & Morten Hviid, 2018. "Price and Behavioural Signals to Encourage Household Water Conservation in Temperate Climates," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2018-01, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    2. Hughes, Neal & Hafi, Ahmed & Goesch, Tim & Brownlowe, Nathan, 2008. "Urban water management: optimal price and investment policy under uncertainty," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6005, Australian Agricultural and Resource Economics Society.
    3. Liang Lu & David Deller & Morten Hviid, 2019. "Price and Behavioural Signals to Encourage Household Water Conservation: Implications for the UK," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 33(2), pages 475-491, January.
    4. Hughes, Neal & Hafi, Ahmed & Goesch, Tim, 2009. "Urban water management: optimal price and investment policy under climate variability," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(2), pages 1-18.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ags:aare05:139341 is not listed on IDEAS
    2. Marie-Estelle Binet & Fabrizio Carlevaro & Michel Paul, 2014. "Estimation of Residential Water Demand with Imperfect Price Perception," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(4), pages 561-581, December.
    3. Katrin Millock & Céline Nauges, 2010. "Household Adoption of Water-Efficient Equipment: The Role of Socio-Economic Factors, Environmental Attitudes and Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(4), pages 539-565, August.
    4. Gawel, Erik & Sigel, Katja & Bretschneider, Wolfgang, 2011. "Affordability of water supply in Mongolia: Empirical lessons for measuring affordability," UFZ Discussion Papers 9/2011, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    5. Xiaojia Bao, 2016. "Water, Electricity and Weather Variability in Rural Northern China," Working Papers 2014-07-02, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    6. Céline Nauges & Caroline Berg, 2009. "Demand for Piped and Non-piped Water Supply Services: Evidence from Southwest Sri Lanka," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(4), pages 535-549, April.
    7. Hanemann, W. Michael & Nauges, Celine, 2005. "Heterogeneous Responses to Water Conservation Programs: The Case of Residential Users in Los Angeles," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt1s43k3fd, Department of Agricultural & Resource Economics, UC Berkeley.
    8. Schleich, Joachim & Hillenbrand, Thomas, 2009. "Determinants of residential water demand in Germany," Ecological Economics, Elsevier, vol. 68(6), pages 1756-1769, April.
    9. Nauges,Celine & Van Den Berg,Caroline, 2006. "Water markets, demand, and cost recovery for piped water supply services : evidence from Southwest Sri Lanka," Policy Research Working Paper Series 3941, The World Bank.
    10. Kostas Bithas & Chrysostomos Stoforos, 2006. "Estimating Urban Residential Water Demand Determinants and Forecasting Water Demand for Athens Metropolitan Area, 2000-2010," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 4(1), pages 47-59.
    11. Marie-Estelle Binet & Fabrizio Carlevaro & Michel Paul, 2012. "Estimation of Residential Water Demand with Imprecise Price Perception," Economics Working Paper Archive (University of Rennes & University of Caen) 201233, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    12. Christopher Boyer & Damian Adams & Tatiana Borisova & Christopher Clark, 2012. "Factors Driving Water Utility Rate Structure Choice: Evidence from Four Southern U.S. States," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(10), pages 2747-2760, August.
    13. Jean-Daniel Rinaudo, 2015. "Long-Term Water Demand Forecasting," Post-Print hal-01290178, HAL.
    14. Vallés-Giménez, Jaime & Zárate-Marco , Anabel, 2013. "Environmental taxation and industrial water use in Spain," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 25, pages 133-162.
    15. Worthington, Andrew C., 2010. "Commercial and Industrial Water Demand Estimation: Theoretical and Methodological Guidelines for Applied Economics Research/Estimación de la demanda de agua comercial e industrial: pautas teóricas y m," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 28, pages 237-258, Agosto.
    16. R. Quentin Grafton & Tom Kompas & Hang To & Michael Ward, 2009. "Residential Water Consumption: A Cross Country Analysis," Environmental Economics Research Hub Research Reports 0923, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University, revised Aug 2009.
    17. Jean-Daniel Rinaudo, 2015. "Long-Term Water Demand Forecasting," Post-Print hal-01183853, HAL.
    18. Gregorio Castro-Rosales & Ramiro Esqueda-Walle, 2021. "Spatial Analysis of Urban Water Use Management in the Northern Border Region of Mexico," International Journal of Business and Management, Canadian Center of Science and Education, vol. 15(11), pages 126-126, July.
    19. Donna Brennan, 2008. "Will we all be Rooned without a Desal Plant? Hanrahan's Lament and the Problem of Urban Water Planning under Climate Change," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 15(3), pages 5-20.
    20. Céline Nauges & Dale Whittington, 2010. "Estimation of Water Demand in Developing Countries: An Overview," The World Bank Research Observer, World Bank, vol. 25(2), pages 263-294, August.
    21. Massimiliano Mazzanti & Anna Montini, 2006. "The determinants of residential water demand: empirical evidence for a panel of Italian municipalities," Applied Economics Letters, Taylor & Francis Journals, vol. 13(2), pages 107-111.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aare06:174095. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.