value of scarce water
Subtitle: measuring the inefficiency of municipal regulations
By: Erin T. Mansur, Sheila M. Olmstead.
Contributors: Olmstead, Sheila M.; National Bureau of Economic Research.
Series: NBER working paper series -- no. 13513.; Working paper series (National Bureau of Economic Research) -- working paper no. 13513.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 45
Subjects: Water consumption -- Government policy -- Economic aspects; Water consumption -- Econometric models
Description: Rather than allowing water prices to reflect scarcity rents during periods of drought-induced excess demand, policy makers have mandated command-and-control approaches, like the curtailment of certain uses, primarily outdoor watering. Using unique panel data on residential end-uses of water, we examine the welfare implications of typical drought policies. Using price variation across and within markets, we identify end-use specific price elasticities. Our results suggest that current policies target water uses that households, themselves, are most willing to forgo. Nevertheless, we find that use restrictions have costly welfare implications, primarily due to household heterogeneity in willingness-to-pay for scarce water.
Notes: "October 2007"

Includes bibliographical references (p. 32-35).

Also available in PDF from the NBER World Wide Web site (www.nber.org).