TY  - JOUR
AU  - Mansur,Erin T.
AU  - Olmstead,Sheila M.
TI  - The Value of Scarce Water: Measuring the Inefficiency of Municipal Regulations
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13513
PY  - 2007
Y2  - October 2007
UR  - http://www.nber.org/papers/w13513
L1  - http://www.nber.org/papers/w13513.pdf
N1  - Author contact info:
Erin T. Mansur
Dartmouth College
6106 Rockefeller Hall
Hanover, NH 03755
Tel: (603) 646-2531
Fax: (603) 646-2122
E-Mail: erin.mansur@dartmouth.edu

Sheila Olmstead
Resources for the Future
1616 P Street, NW
Washington, DC  20036
Tel: 202-328-5163
E-Mail: olmstead@rff.org
AB  - 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.
ER  -