Cheap as sips

With birds in the air, trees ablossom, and summer just around the corner, the thoughts of environmental economists naturally turn to water pricing. Among the best of them is ANU’s Quentin Grafton, who will be presenting an ANU seminar on this very topic next week.

Sydney Water: Pricing for Sustainability
The presentation examines how scarcity pricing can be used to assist with urban water demand management in Sydney in low rainfall periods. Based an estimated daily water demand function it has been found that current water supplies are inadequate at existing prices to cope with another rainfall period similar or worse to what occurred over the period 2001-2005. The policy implication is to ensure adequate supplies and to meet future demands, Sydney water prices must be substantially raised at pre-defined supply trigger points in response to low rainfall periods.

Tuesday, 24 October
12.30pm
Seminar Room  4
Crawford Building
Light refreshments available
Tel 02 6125 0168

With much less rigor than Quentin, I made a similar argument last year. Scrap water restrictions, raise the water price, compensate poor households, and let the market do its magic.

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3 Responses to Cheap as sips

  1. Matt says:

    I think another topic that the whole issue of water management and pricing raises is that of urban and infrastructure design. If we have to pay market rates for water and we have to pay tax and council rates etc. then the least we can get for our dollars is better capture of stormwater etc. I notice that the seminar is looking at urban demand management, what about supply-side expansion. There is a pun about trickle-down economics waiting to happen there!

  2. Sacha says:

    To ensure that households feel price signals, it might be useful to ensure that each household is directly billed for the water they consume. In some (many?) blocks of units in Sydney, the whole block is billed rather than individual units, although Sydney Water is trialling individual water bills for new units.

    It may also be true that some (many?) renters indirectly pay their water bills as a component of their rent. For transparency and directness, it may be more useful if all renters paid their water bills directly rather than through their rents.

  3. Kevin Cox says:

    We a proposing a system that includes price signals, rewards for behaviour change and guaranteeing that some money paid for water goes to infrastructure to improve the supply of water rather than being used for other purposes.

    Have a look at a presentation we have prepared for water authorities to try to sell the idea to them,

    http://www.getmail.com.au/design/water/water.html

    Be very interested in someone finding the holes in the approach.

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