CONSERVATIONAL WATER PRICING FOR INCREASED WATER SUPPLY BENEFITS1

ABSTRACT: A study was undertaken to see if benefits from water supply could be increased by utilizing price-usage information in reservoir design studies. Three pricing policies were examined. The first policy assumed no price-use relationship, and quantity demanded was based on existing community usage with a low water rate. The price of water was set to recover system costs. A price-use relationship was assumed in the second policy and the water rate was constant. The price of water was determined from the associated system which provided maximum expected net benefits. The third policy assumed the price-use relationship and the price charged for water during each billing period was a non-linear function of storage which increased as the amount of water in storage at the beginning of the period decreased. It was found that the use of the conservation pricing policies substantially reduced storage requirements while providing demonstrable net benefits to the community and a large average supply. The conservation pricing policies substantially lowered the average price paid for water. The effect of uncertainty in consumer response to changes in price was studied by using a probabilistic price-use relationship. This uncertainty did not significantly reduce the effectiveness of the conservation policy. It was concluded that demand management by the use of a proper pricing policy could significantly increase net water supply benefits to a community.     

RURAL RESIDENTIAL WATER DEMAND: AN ECONOMETRIC AND SIMULATION ANALYSIS1

ABSTRACT: This study proposes that demand management through pricing policies can be used in conjunction with supply management to solve water supply problems. Economic principles are shown to apply to rural residential water use. A demand function for water was developed based on cross-sectional water use data collected in Kentucky. Price was found to be a significant determinant of the quantity of water demanded. A constant price elasticity of -0.92 was found. The demand function was used in a simulation analysis to determine reservoir capacity needed to supply water needs of a rural community. The simulation revealed that price can significantly affect required reservoir storage.     

THE EFFECT OF PRICE ON LONG RUN WATER SUPPLY BENEFITS AND COSTS1

ABSTRACT The long-term effects of presently used and alternatively proposed water pricing policies were studied using some tools of operations research and economics. A discrete deterministic dynamic programming model was structured and operated to determine the optimal water supply capacity expansion paths for a hypothetical residential community with a given water pricing policy. The objective of the model was the maximization of future discounted consumers'surpluses plus producer's revenues net of the long-run cost of supply. State variables were the size of system capacity in MGD and stage variables were the times of feasible capacity increase in years. Demand curves, population sizes, and growth rates for various economic sectors of the community were assumed known, as well as short-run production and capital construction costs. Several policies, including constant unit rates, decreasing or increasing block rates and summer differential rates were tested. It was concluded that price plays a major role in the short-run allocation and long-run planning and conservation of water supplies. Conservational pricing policies were advocated as means of lowering the long-run cost of water, using the water price-demand function as a planning tool. Further research in these areas was recommended.     

PEAK PERIOD DESIGN STANDARDS FOR SMALL WESTERN U.S. WATER SUPPLY SYSTEMS1

ABSTRACT: In order to determine design capacities for various components of municipal and rural domestic water supply systems, engineers must estimate water requirements for an entire year (water rights), for the peak season (reservoir storage), for the peak day (pump or treatment plant size), and for peak hour (pipeline sizes). Historically, per capita water use rates have varied greatly between systems, particularly in semiarid regions where outdoor demands are large. The resulting uncertainty in design capacity estimates can cause either inadequate capacities or premature investment. In order to minimize that uncertainty multiple regression and frequency analyses were made of the various water demand parameters mentioned above for 14 systems in Utah and Colorado. Specifically, demand functions are reported for average month, peak month, and peak day. Peak hour demands were also studied but are reported in a different paper. The independent variables which were significant for monthly and daily demands were price of water and an outdoor use index which includes the effect of variation in landscaped area and accounts for use of supplementary ditch or pressure irrigation systems. The demand functions were developed with data from systems varying in size from very small low density rural systems to Salt Lake City's water system. The correlation coefficients (R²) vary from 0.80 to 0.95.     

OPTIMIZATION IN MUNICIPAL WATER SUPPLY SYSTEM DESIGN1

ABSTRACT. The design of a municipal water supply system may involve utilizing singly or in combination a conventional water supply, a desalted water supply, and a supply from a recharged aquifer reservoir. Optimization of the design requires a model formulated in a way that modern methods of systems analysis can be used. This study concerns the formulation, solution, and evaluation of a mathematical model of a municipal water supply system that includes a supply from a variable quality output desalting plant. The combined system is operated in conjunction with an artificially recharged aquifer reservoir. Also considered are short periods of water shortages. The model is set up in an approximate linear programming format, and the optimum solution (minimum cost) is found. The model is tested by applying it to the design of a supply system to meet the 1985 estimated water demand of the city of Lincoln, Nebraska. Results of this test indicate that the artificial reservoir and the existing conventional supply system are capable of supplying that demand during all but the peak period. An electrodialysis desalting system is used in this analysis. It is competitive only when the length of transmission pipeline for a conventional supply system approaches 90 miles. The model is formulated in a general way so that it can be applied to almost all situations encountered in municipal water supply design, as well as to the specific system designated for this study.     

THE IMPACT OF POLICY VARIABLES ON RESIDENTIAL WATER DEMAND AND RELATED INVESTMENT REQUIREMENTS1

Increasing population and urbanization necessitate very large investments in municipal water supply. These investments could be more efficiently deployed if the impact of policy variables such as marginal pricing, metering, by-laws on lawn watering and plumbing fixtures, and higher summer charges were known. The paper in particular advocates the replacement of the present declining block rate by an increasing block rate. In order to know the impact of policy variables, a multiple regression model is built; the fitted model is tested against some data not included in calibrating the model. Next the impact of selected policy variables on the target variable (residential water demand during summer) is worked out for a new urban community of 200,000 people. The investment requirements may decrease appreciably as a result of a price increase when marginal (or commodity) charges are low but the impact of price changes when commodity charges are already high is less evident and non-price policy variables may be more effective in maintaining high quality water and also satisfying the constraint of limited budgets for municipal services.     

A “RATIONAL” POLICY FOR THE ENERGY AND ENVIRONMENTAL CRISES1

ABSTRACT: The present energy and environmental crises are due to increasing per capita demands as well as increasing populations. The role that traditional pricing policies have played in promoting these demands is discussed. The reduction or stabilizing of per capita demands is advocated through the use of Conservational Pricing mechanisms which charge higher average prices for high consumption. An example of the effect of Conservational Pricing in the water supply industry is given.     

Residential Water Demand Management: Lessons from Aurora,Colorado1

Abstract: Residential water demand is a function of several factors, some of which are within the control of water utilities (e.g., price, water restrictions, rebate programs) and some of which are not (e.g., climate and weather, demographic characteristics). In this study of Aurora, Colorado, factors influencing residential water demand are reviewed during a turbulent drought period (2000‐2005). Findings expand the understanding of residential demand in at least three salient ways: first, by documenting that pricing and outdoor water restriction policies interact with each other ensuring that total water savings are not additive of each program operating independently; second, by showing that the effectiveness of pricing and restrictions policies varies among different classes of customers (i.e., low, middle, and high volume water users) and between predrought and drought periods; and third, in demonstrating that real‐time information about consumptive use (via the Water Smart Reader) helps customers reach water‐use targets.     

THE COST OF PEAK CAPACITY WATER1

ABSTRACT: Calgary, the fastest growing city in Canada, is about to expand its urban water supply facilities in order to meet peak summer demands. Most of Calgary's residential water is sold by flat rate. The effect of this pricing policy on peak and average demands is discussed. The true marginal cost of peak capacity from the new expansion is calculated. The effect of a proposed metering program on capacity expansion requirements is computed. It is concluded that metering should preceed the next capacity expansion.     

MUNICIPAL WATER USE AND WATER RATES DRIVEN BY SEVERE DROUGHT: A CASE STUDY1

ABSTRACT: This paper synthesizes and interprets data pertaining to the evolution of average water revenue, water use, and the average cost of water supply in the City of Santa Barbara, California, from 1986 to 1996, a period which included one of the most devastating droughts in California this century. The 1987–1992 drought hit the study area particularly hard. The City of Santa Barbara was dependent exclusively on local sources for its water supply. That made it vulnerable as the regional climate is prone to extreme variability and recurrent droughts. The 1986–1992 drought provided a rare opportunity to assess the sensitivity of municipal water use to pricing, conservation, and other water management measures under extreme drought conditions. Our analysis indicates that the average cost of water rose more than three-fold in real terms from 1986 to 1996, while the gap between the average cost of supply and the average revenue per unit of water (= 100 cubic feet) rose in real terms from $0.14 in 1986 to $ 0.75 in 1996. The rise of $3.08 in the average cost of supplying one unit of water between 1986 and 1996 measures the cost of hedging drought risk in the study area. Water use dropped 46 percent at the height of the drought relative to pro-drought water use, and remains at 61 percent of the pre-drought level. The data derived from the 1987–1992 California drought are unique and valuable insofar as shedding light on drought/water demand adaptive interactions. The experience garnered on drought management during that unique period points to the possibilities available for future water management in the Arid West where dwindling water supplies and burgeoning populations are facts that we must deal with.     

Water Appropriation Systems for Adapting to Water Shortages in Iraq

Climate variability and population growth have intensified the search internationally for measures to adapt to fluctuations in water supplies. An example can be found in the lower part of the transboundary Tigris‐Euphrates Basin where water shortages in 2008‐2009 resulted in high economic costs to irrigation farmers. Losses to irrigators in the lower basin have made a compelling case to identify flexible methods to adapt to water shortage. Few published studies have systematically examined ways to enhance the flexibility of water appropriation systems to adapt to water shortage. This article addresses an ongoing challenge in water governance by examining how profitability at both the farm and basin levels is affected by various water appropriation systems. Four water appropriation systems are compared for impacts on farm income under each of three water supply scenarios. Results show that a (1) proportional sharing of water shortages among provinces and (2) unrestricted water trading rank as the top two appropriation systems. The shadow price of water for irrigation rises from zero at a full water supply level to US$93/1,000 m³ when supply falls to 20% of full levels. Similar methods could be used to analyze challenges facing the design or implementation of water appropriation systems in the world's irrigated regions.     

WATER SUPPLY COSTS FOR SMALL PRIVATE UTILITIES1

ABSTRACT: This paper examines the cost of water supply for small and mid-sized private water utilities. An econometric approach was employed in which data on utility costs and characteristics were used to estimate a total water supply cost function from which average and marginal costs were derived. The results suggest that although average and marginal costs decline with output, the rate of decline rapidly approaches zero, and unit costs therefore appear to remain relatively constant over a wide range of output. Implications of the results for pricing policy are examined.     

REAPPRAISAL OF WATER SUPPLY RESOURCES IN DELAWARE RIVER BASIN USING SYNTHETIC HYDROLOGY1

ABSTRACT The 60's drought (1961 1966) which hit the Northeastern United States, had its center over the Delaware River Basin and caused water supply shortages to New York City, Philadelphia, and many other towns and industries in the Basin. Until this event occurred, the existing water supply sources and those planned for the future had been considered adequate, as they were designed for the worst drought of record (usually the 1930-31 drought). In view of this “change in hydrology,” the Delaware River Basin Commission authorized a study (DRBC Resolution 67-4) to re-evaluate the adequacy of existing and planned water supply sources of the Delaware River Basin and its Service Area (New York City and northern New Jersey). Synthetic hydrology is a tool which can be used to overcome many of the limitations of the traditional approach. By analyzing generated streamflow traces in this study, it has been determined that there is a definite relationship between the accumulated rainfall deficiency during the drought and the return periods associated with various durations of runoff in the drought. This indicated that generated traces can be used to standardize the hydrology over an area where the intensity of drought varied. This represented an important facet in the study, because it provided a means to equalize the effects of this drought over the study area, and gave the Delaware River Basin Commission more information so that it could better plan and manage its water resources equitably, not only for the people within the Basin, but for the New York City and northern New Jersey areas as well. Synthetic hydrology was used to determine yield-probability relationships for 50-year periods, and storage-yield-frequency relationships for existing and planned water-supply reservoirs. It was also used to determine yield-probability relationships for reservoir systems within the Basin. In the study, it was determined that monthly streamflow traces and uniform draft rates could be used in yield analysis because of the magnitude of the reservoirs and because seasonal variations of draft rate are small in the study area. Although it was found that with the streamflow generating models (first order Markov) in common use today, it is not possible to definitely determine the actual frequency of a very severe historic drought, it is possible to place a drought in perspective by using synthetic hydrology. The study showed that it is a useful tool in determining water availability over a basin and is useful in studying water management problems such as interbasin transfers, and reservoir systems operations.     

“We are free when water is available”: gendered livelihood implications of sporadic water supply in Northern Ghana

ABSTRACT

Water shortages may present different and diverse implications for gender subgroups particularly in low-income settings. Yet, little research has documented the gendered livelihood implications of water shortages in Ghana. Based on a cross-sectional mixed method research involving a survey of 250 household heads and complemented with a qualitative study of 86 participants, the paper examines the differential effects of sporadic water supply in Tatale-Sanguli District of Northern Ghana. Our findings suggest that the livelihood effects of sporadic water supply in Tatale-Sanguli area are gendered, with females being disproportionately affected as compared to males. These differential effects are often framed by both gender role differentiation and inequities in access to vital productive resources and critical assets such as bicycles, tricycles and motor bikes. These findings highlight not only the need for local government and non-governmental organisations to step up efforts in water provision, but also to recognise the gendered effects of water shortages in Tatale-Sanguli District. Key to policy is also to ensure that programmatic interventions during water shortages take account of the likely gendered effects and differentiated burdens.     

Characterizing Drought in Irrigated Agricultural Systems: The Surface Water Delivery Index (SWDI)

Quantifying surface water shortages in arid and semiarid agricultural regions is challenging because limited water supplies are distributed over long distances based on complex water management systems constrained by legal, economic, and social frameworks that evolve with time. In such regions, the water supply is often derived in a climate dramatically different from where the water is diverted to meet agricultural demand. The existing drought indices which rely on local climate do not portray the complexities of the economic and legal constraints on water delivery. Nor do these indices quantify the shortages that occur in drought. Therefore, this research proposes a methodological approach to define surface water shortages in irrigated agricultural systems using a newly developed index termed the Surface Water Delivery Index (SWDI). The SWDI can be used to uniformly quantify surface water deficits/shortages at the end of the irrigation season. Results from the SWDI clearly illustrate how water shortages in droughts identified by the existing indices (e.g., SPI and PDSI) vary strongly both within and between basins. Some surface water entities are much more prone to water shortages than other entities based both on their source of water supply and water right portfolios.     

CONSERVATION PRACTICES AND ATTITUDES AMONG MARYLAND WATER SUPPLY MANAGERS1

ABSTRACT: In addition to offsetting water supply shortages, water conservation is recognized as serving many purposes, ranging from reduced energy consumption to lower capital costs. Since the discussion of these benefits has been a recent development and has generally excluded local water supply managers, a question arises as to whether supply managers are implementing conservation programs to exploit these benefits. A survey of the managers at 35 Maryland water utilities provides insight into the prevailing attitude toward conservation in a water rich eastern state. The results indicate that most managers continue to view conservation only as a short term response to temporary supply shortages. Only 12 Maryland utilities have undertaken any form of water conservation activity and just two systems have ongoing, comprehensive conservation programs. Institutional, perceptual, economic, political, and time constraints all contribute to the managers’attitudes and general inaction. If water conservation is to be widely practiced, these issues must be addressed and the benefits attributed to conservation must be better documented and articulated to supply managers.     

Fuzzy pricing for urban water resources: model construction and application

A rational water price system plays a crucial role in the optimal allocation of water resources. In this paper, a fuzzy pricing model for urban water resources is presented, which consists of a multi-criteria fuzzy evaluation model and a water resources price (WRP) computation model. Various factors affecting WRP are comprehensively evaluated with multiple levels and objectives in the multi-criteria fuzzy evaluation model, while the price vectors of water resources are constructed in the WRP computation model according to the definition of the bearing water price index, and then WRP is calculated. With the incorporation of an operator's knowledge, it considers iterative weights and subjective preference of operators for weight-assessment. The weights determined are more rational and the evaluation results are more realistic. Particularly, dual water supply is considered in the study. Different prices being fixed for water resources with different qualities conforms to the law of water resources value (WRV) itself. A high-quality groundwater price computation model is also proposed to provide optimal water allocation and to meet higher living standards. The developed model is applied in Jinan for evaluating its validity. The method presented in this paper offers some new directions in the research of WRP.     

WELFARE EFFECTS OF ALTERNATWE WATER RATIONING SCHEMES: A CASE STUDY1

ABSTRACT: Four alternate schemes often used to deal with a water shortage are: physical rationing, lifeline with increasing block rates, rationing with resale, and pure price rationing. Each of these are analyzed using a supply-demand framework. The theoretical results are applied to a representative California water district and the welfare loss is calculated for a hypothetical 20 percent reduction in water supply for six different income classes. We find that reliance on schemes using the price mechanism in one form or another is clearly superior, in terms of welfare loss, as a means of dealing with a water shortage.     

基于博弈模型的水价策略与节水策略分析

在当前水资源浪费、用水效率较低的背景下,仍然有许多地区继续实行低水价政策,本文认为这是供水企业与用水企业以及政府水务部门相互博弈的结果。通过构建一个供水企业与用水企业的博弈模型,并采用演化博弈分析方法分析动态演化的结果,本文发现当前采用低水价的主要原因在于：供水企业制定水价时要同时考虑私人收益与公共节水收益,而高水价对经济产生的冲击成本不足以弥补高水价产生的公共节水收益与私人收益,从而导致有些地区供水企业不敢提高水价,一直采用低水价策略。进一步地,本文采用不完全信息动态博弈方法分析供水企业与政府关于水价的议定过程,发现提高水价对经济的冲击越大,且节水技术投入成本越大而节水的公共收益越小时,政府水务部门同意低水价的概率越大;反之,则同意高水价的概率越大。从博弈论的角度系统地分析了低水价产生的决策过程,可对提高水价、促进节约用水具有一定的指导意义。     

Review of socio-economic drivers of community acceptance and adoption of decentralised water systems

The aim of this paper is to highlight key social and economic drivers crucial to understanding community acceptance and adoption of decentralised water systems. The review focused on social science literature pertaining to alternative forms of household water, with an emphasis on research examining decentralised water acceptance. Researchers consistently reported that most communities were open to alternative water sources for domestic applications; however, this was highly dependent upon the level of personal contact with the water. Acceptance and adoption of alternative water technology, such as decentralised systems, was influenced by risk perception, water culture, and threat perception. Motivational drivers were also identified as potentially influencing adoption of decentralised systems. A clear limitation of the literature was found to be an over-reliance on measuring people's intentions to adopt alternative water systems and building a conceptual understanding of acceptance solely on hypothetical water supply scenarios. Further, within the social science literature there appears to be a skewing towards focusing on acceptance of centralised alternative water, such as recycled and desalinated water systems. Although there are some research outcomes that are generalizable to the decentralised water context, it is clear that there is a significant gap in the knowledge base of social drivers specific to the acceptance of decentralised water systems and the factors contributing to its widespread use. It is recommended that future research focus on examining public attitudes relevant to decentralised water systems, as well as adoption behaviours among current users of these systems. This will assist in developing policies specific to domestic decentralised water use.