NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Value of Scarce Water: Measuring the Inefficiency of Municipal Regulations

Erin T. Mansur, Sheila M. Olmstead

NBER Working Paper No. 13513
Issued in October 2007
NBER Program(s):   EEE   IO

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.

download in pdf format
   (416 K)

email paper

This paper is available as PDF (416 K) or via email.

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Mansur, Erin T. & Olmstead, Sheila M., 2012. "The value of scarce water: Measuring the inefficiency of municipal regulations," Journal of Urban Economics, Elsevier, vol. 71(3), pages 332-346.

Users who downloaded this paper also downloaded these:
Olmstead, Hanemann, and Stavins w13573 Water Demand Under Alternative Price Structures
Olmstead and Stavins w14147 Comparing Price and Non-Price Approaches to Urban Water Conservation
Brewer, Glennon, Ker, and Libecap w13002 Water Markets in the West: Prices, Trading, and Contractual Forms
Cutler and Miller w11096 Water, Water, Everywhere: Municipal Finance and Water Supply in American Cities
Grafton, Landry, Libecap, McGlennon, and O'Brien w16203 An Integrated Assessment of Water Markets: Australia, Chile, China, South Africa and the USA
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us