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- Title
The Demand for Water: Consumer Response to Scarcity.
- Authors
Krause, Kate; Chermak, Janie; Brookshire, David
- Abstract
Provision of water raises several issues for municipal utility companies and other suppliers, including reliability of supply in arid regions or during droughts, equity issues that arise because water is literally a necessity, and heterogeneity in consumer response to regulatory policy. We combine experimental and survey responses to investigate demand for water. The experiments simulate water consumption from a potentially exhaustible source, revealing heterogeneous demand for water. We estimate econometrically water demand for different consumer groups. A regulator could use estimates of disaggregated demand to attain conservation goals by designing an incentive compatible pricing system. The example given achieves a conservation goal while minimizing enforcement costs and welfare loss.
- Subjects
WATER supply; SUPPLY &; demand; PUBLIC utilities; WATER consumption; ECONOMETRICS; PRICING
- Publication
Journal of Regulatory Economics, 2003, Vol 23, Issue 2, p167
- ISSN
0922-680X
- Publication type
Article
- DOI
10.1023/A:1022207030378