Abstract:
The paper evaluates welfare losses from urban water supply disruptions for a sample of 53 urban water utilities in California collectively providing service to over 20 million customers. The analysis accounts for the fact that most water utilities engage in a form of average cost pricing where volumetric rates are used to finance fixed expenses. We estimate utility-specific price elasticities for use in the welfare analysis, which are derived from a demand estimation based on a panel data set of 37 California water utilities. Welfare losses for an annual disruption range from an average of 1,458 per acre−foot of shortage to 3,426 per acre-foot of shortage for a 30% supply disruption. The results indicate a household-level willingness to pay to avoid an annual disruption of approximately 60–60–600 depending on the shortage size and location.
https://en.wikipedia.org/wiki/California_State_Water_Project#/media/File:CaAqueductPumping_wb.jpg
http://www.journals.uchicago.edu/doi/abs/10.1086/687761by Steven Buck, Maximilian Auffhammer, Stephen Hamilton, and David Sunding
Journal of the Association of Environmental and Resource Economists via University of Chicago Press Journals
Volume 3, Number 3; September, 2016; Online: July 27, 2016
Keywords: California, Demand estimation, Residential water, Water shortage.
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