EXTERNALITIES,WATER PRICES,AND WATER TRANSFERS1

Discussing, estimating or analyzing the value of water is a difficult task. In addressing the value of water as reflected in its price — either as charged by a water utility, as the price of a water transfer, or a water sale in some market — this paper will examine three propositions regarding water pricing. The paper will consider the marginal scarcity rent of water, estimates of externalities, the full cost pricing of water and the consequences of these considerations on water prices, transfers and the efficiency of water use.     

SOCIOECONOMIC IMPACTS OF CLIMATE CHANGE ON U.S. WATER SUPPLIES1

ABSTRACT: A greenhouse warming would have major effects on water supplies and demands. A framework for examining the socioeconomic impacts associated with changes in the long-term availability of water is developed and applied to the hydrologic implications of the Canadian and British Hadley2 general circulation models (GCMs) for the 18 water resource regions in the conterminous United States. The climate projections of these two GCMs have very different implications for future water supplies and costs. The Canadian model suggests most of the nation would be much drier in the year 2030. Under the least-cost management scenario the drier climate could add nearly $105 billion to the estimated costs of balancing supplies and demands relative to the costs without climate change. Measures to protect instream flows and irrigation could result in significantly higher costs. In contrast, projections based on the Hadley model suggest water supplies would increase throughout much of the nation, reducing the costs of balancing water supplies with demands relative to the no-climate-change case.