371 Lecture 5 06

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371 Lecture 5 06 Powered By Docstoc
					The friends thou hast and their attention
tried, grapple them to your soul with hoops
of steel.

                  Shakespeare
               Water Pricing
Because water is not priced, or is under-priced,
overuse results (and negative externalities).
E.g., water for ag. in Alberta is 75% subsidized.
So we invest in more supply systems (or
irrigations systems), etc…
Result? Inefficient use and misuse of water
But… very difficult to put a value on water (or to
consider it merely another commodity)
   Requires measurement of actual use (not always
    possible)
   Difficult to administer
   Water pollution damages do not exist
How do we place a value on water?
 Many problems: water is vital for
 ecosystems, for transportation, for human
 livelihoods… also has a social value…
 E.g., selling Great Lakes water… could
 result in problems for: hydropower;
 transport; shoreline erosion; biodiversity
 Pricing raises ethical and moral issues…
Pricing Methods? None are perfect
   Cost of alternative (electric from hydro-power
    vs. fossil fuel)
   Value added (irrigation vs rain-fed)
   Explicit value (who determines?) + cost of
    supply
Do we privatize water supply? More
later…
           Tariff Structures
No meter:
   Connection charge
   Fixed charge
With meters
   Volumetric rate (what about variability for
    company?)
   Minimum charges? Block rates (increasing or
    decreasing)?
   Cost of meter?
         Alberta Example
Edmonton homes – 100% metered. Calgary ~
50% (flat rate then declining block rate for
meters). Edmonton consumes ½ the water (per
household) of Calgary. Unmetered Calgary
residents consume 48% more water than
metered residents (much of the savings is from
lower use during peak periods).
So… pricing can have an effect… No question
about this.
        % of households metered
Country (OECD)   Single family houses   Apartments



Belgium          90                     many
Canada           55                     few
Germany          100                    10 - 20
Hungary          100                    n.a.
Norway           10                     0
UK               15                     few
US               90                     n.a.

				
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posted:9/15/2012
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