THE EFFICIENCY OF WATER PRICING: A RATE OF RETURN ANALYSIS FOR MUNICIPAL WATER DEPARTMENTS1

ABSTRACT: The rate of return on invested capital can be used as a guide to resource allocation by municipal water departments (MWD's) in the same way it is used in the private sector. To achieve economic efficiency, the target rate of return for MWD's should be the market rate of return as an approximation to the opportunity cost of capital. The actual internal rate of return for a sample of 30 California MWD's for the period 1970-1982 is calculated for this study. The operating internal rate of return varies across the sample MWD's from less than 2 percent to 14 percent. If 10 percent is taken as the opportunity cost of capital, 25 of the 30 MWD's were inefficient; i.e., earned less than 10 percent. Half the sample earned less than 5 percent. An examination of potential causes of low rates of return shows that low average water prices are the primary reason for the low rates of return. For efficient operation, MWD's should set a target rate of return equal to the opportunity cost of capital and adjust water prices so as to achieve that target.     

Residential Demand for Water in the Chicago Metropolitan Area1

Mieno, Taro and John B. Braden, 2011. Residential Demand for Water in the Chicago Metropolitan Area. Journal of the American Water Resources Association (JAWRA) 47(4):713‐723. DOI: 10.1111/j.1752‐1688.2011.00536.x Abstract: This paper provides the first contemporary analysis of residential water demand in humid Northeastern Illinois, in the vicinity of Chicago, and explores seasonal and income‐based differentials in the responsiveness of water use to water prices. Using a panel of system‐level data for eight water systems and controlling for seasons, weather, incomes, and community characteristics, the analysis yields low estimates of price elasticity of demand for water in line with other studies. Furthermore, price response is greater in summer and less in higher income communities. We suggest that use of seasonal pricing can help mitigate equity issues arising from differential income elasticities while taking advantage of the greater price responsiveness of summertime water use.     

THE EFFECTWENESS OF PRICING AS A STAND-ALONE WATER CONSERVATION PROGRAM1

ABSTRACT: Economic theory clearly indicates that the use of increasing rate structures will reduce the demand for water and produce monetary incentives for consumers to conserve. One problem with estimating the effectiveness of using rate structures as a conservation program is that they are usually accompanied by other conservation efforts. Thus, it is difficult to determine the effectiveness of any one conservation component. This paper examines the effectiveness of increasing rate structures in a situation where no other conservation program was introduced. The paper uses customer data from the Spalding County (Georgia) Water Authority where an increasing rate structure replaced a descending rate structure in January 1991. Since the imposition of the increasing rate structure, the number of customers has increased 21 percent while total water demand has gone up only 15 percent and per customer water use has declined 5 percent. The daily water use per connection has declined from 243 gallons in 1990 to 231 in 1993, and monthly use has gone from 7,381 gallons to 7,028 per connection over the same period. Statistical tests indicate that water consumption during the two periods was significantly different while weather factors were not.     

济南市城区水资源价值模糊综合评价

水资源具有价值和价格，价格杠杆是解决水问题的重要手段。以济南市城区为例，分析了影响水资源价值的主要因素，运用模糊数学方法对水资源价值进行了评价，并计算出了济南市城区的水资源价值。     

浅议日本的自来水水价

介绍日本不同城市的两部分水费制的具体实施和“负担公平化和经营稳定化”宗旨以及供水行业支出费用的组成.日本的市民每个月的自来水水费支出数额占整个生活消费总数的比例呈缓慢上升趋势,随着水价逐年缓慢增长.日本的水价和水费管理模式以及上海最新提出的三级梯度水价规划方案值得借鉴与参考.     

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.     

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.     

长江中游地区水资源产业化开发研究

长江中游地区对丰富的水资源进行产业化开发可实现振兴经济的目的,其中售水、水电、水运、水域农业和水上旅游业是主要开发领域。水资源产业化开发的利益关系由合理的收费与价格体系进行协调。     

IMPROVING IRRIGATION WATER MANAGEMENT IN THE INDUS BASIN1

ABSTRACT: Over half of the water delivered from the canal system to the watercourses managed by the farmers is not made available to the farmers' crops in Pakistan. Most of this water loss is due to loss of water through the banks of the watercourses. Lack of maintaining these banks and lack of cleaning the watercourse is a result of inadequate organization of the 10 to 150 farmers who use the watercourse, and a deficiency of knowledge concerning the amount of their water which is being lost. Various methods of watercourse improvement have been evaluated including concrete and masonry linings and simple earthen improvements of the ditches with concrete control structures, junctions, and turnouts. With the cost of labor low in Pakistan, the earthen improvements with concrete structures appear to be the best investment. Farm water management improvement programs have been implemented in most of the provinces which include this type of watercourse improvement, land leveling and advice to the farmers on how and when to irrigate his crops to optimize his production. The rate at which personnel can be trained to help the farmers implement these improved water management practices is limiting the rate of implementation.     

DEVELOPING AND ASSESSING A MODEL OF RESIDENTIAL WATER CONSERVATION1

ABSTRACT: Relevant literature was reviewed from which a model of residential water conservation was developed. Four residential conservation program interventions were posited: 1) public education, 2) pricing variables, 3) water use restrictions, and 4) building code requirements. Four exogenous variables affecting residential water use were also posited: 1) temperature, 2) rainfall, 3) household income, and 4) household size. The impacts of these eight variables on residential per capita daily use were assessed by cross sectional and time series analysis. Study results generally supported the porposed model, with less consistent support obtained for pricing variables and conservation beliefs. The paper concludes with the hypothesis that an inclining block rate structure coupled with an informational program designed to inform consumers of their consumption under each block will have a synergistic impact.     

Valuing Water Rights in Douglas County,Oregon, Using the Hedonic Price Method1

Abstract: This paper uses the hedonic price method to estimate the value of an acre‐foot of irrigation water in Douglas County, Oregon. The analysis uses detailed information from 113 arms‐length transactions of farmland for 2000 and 2001. The estimated willingness‐to‐accept of $261 to sell an acre‐foot of irrigation water is consistent with other studies and recent transactions in the study area. Estimates for the value of leasing water are provided using a range of discount rates and leasing periods.     

东江流域水资源价格调控研究

运用水资源价值模糊数学模型计算出流域四大区间水资源价格,并对价格调整后的供水风险和水资源优化配置进行了分析.根据计算结果认为,水价的调整可以作为水利工程措施的一种有益补充,通过建立水市场,利用水价这一杠杆,实现水权的有偿转让,结合工程措施实施流域内调水能有效的降低区间供水风险.     

RESIDENTIAL WATER DEMAND IN METRO MANILA1

ABSTRACT: An econometric demand function is estimated for residential water use in Metropolitan Manila. Regression results using annual time series data from 1970 to 1981 show that residential water consumption responds to changes in economic variables. Residential demand showed an income (household) elasticity of 0.542 and a combined price elasticity of -0.287. Implications for planning and management are discussed.     

RESIDENTIAL WATER DEMAND: A POOLED,TIME SERIES,CROSS SECTION STUDY OF MALMÖ, SWEDEN1

Shortcoming associated with past water demand studies are evaluated. To overcome these shortcomings, pooled, time series, cross section data from -6, Sweden, are used in an ordinary Least squares analysis to estimate the demand for residential water. Elasticities for five variables, including price and income, are estimated. An approach for the conduct of future water demand studies is suggested.     

PRICE BEHAVIOR IN THE WATER MARKET OF NORTHEASTERN COLORADO1

ABSTRACT Past prices of Colorado-Big Thompson water shares were analyzed using an asset pricing model which incorporated the growth rate in real returns to irrigation water and the value of potential urban water uses. A real growth rate in the returns to irrigation water was estimated at 5.3 percent. Nevertheless, market values for water shares have exceeded capitalized agricultural values since 1969. Historically, urban use potential was heavily discounted, but the implicit discount rate fell rapidly in the last decade. The expectation that water shares will eventually be sold to municipal or industrial consumers now appears to be reflected fully in water prices.     

INDUSTRIAL WATER DEMAND WITH WATER REUSE1

ABSTRACT: This work establishes an industrial water demand (IWD) model for a short term estimate, which considers water reuse technologies and discharge regulations, for the integrated circuit (IC) industry in northern Taiwan. Based on the optimization of an industrial water cost system, a computerized system dynamics model (SD model) is developed to generate individual firm IWD using data from year 2000. A market IWD is further constructed for 25 1C firms in the study area and is approximated by an inverse logistic curve. Analytical results demonstrate that price elasticity varies with water price in cases involving water reuse.     

LINEAR PROGRAMMING USE FOR EVALUATING WATER RESOURCES AND COST AND BENEFIT ALLOCATION1

ABSTRACT A linear programming model for a river basin was developed to include almost all water-related economic activity both for consumers and producers. The model was so designated that the entire basin or basin sub-division could be analyzed. The model included seven sectors, nine objective function criteria, and three river-flow levels. Economic basis for conflicts among sectors over incidence of cost allocation and level of economic activity can be traced to some chosen objective. The disposal of untreated household waste water, particularly from the rural household, directly into the river was consistent with maximizing net benefits and minimizing costs. The optimum resource allocation, water-treatment plants, farms and industry activities would change with flow level. For each of the three industries analyzed separately, paper, wool and tanning, public treatment of industrial waste water was the optimal treatment process in one or more of the solutions. Lake shoreline was the dominant feature determining lake-resource valuation. Implied capital value varied from $126 per shoreline foot to over $250 depending on discount rate. Implied prices on lake surface ranged from $42 to $147 per acre. Strong economic forces encouraged small lot sizes for vacation cottages.     

A MONTHLY TIME SERIES MODEL OF MUNICIPAL WATER DEMAND1

A multivariate time series model is formulated to study monthly variations in municipal water demand. The left hand side variable in the multivariate regression model is municipal water demand (gallons per connection per day) and the right hand side contains (explanatory) variables which include price (constant dollars), average temperature, total precipitation, and percentage of daylight hours. The application of the regression model to Salt Lake City Water Department data produced a high multiple correlation coefficient and F-statistic. The regression coefficients for the right hand side variables all have the appropriate sign. In an ex post forecast, the model accurately predicts monthly variations in municipal water demand. The proposed monthly multivariate model is not only found useful for forecasting water demand, but also useful for predicting and studying the impact of nonstructural management decisions such as the effect of price changes, peak load pricing methods, and other water conservation programs.     

INVESTOR OWNED VS. PUBLICLY OWNED WATER AGENCIES: AN EVALUATION OF THE PROPERTY RIGHTS THEORY OF THE FIRM1

ABSTRACT: The property rights theory of the firm is evaluated by comparing the cost structures of a sample of water agencies under two alternative modes of ownership - public and investor owned. On the basis of the sample, investor owned water agencies appear to have lower cost structures.     

DEMAND PROJECTIONS CONSIDERING CONSERVATION1

ABSTRACT: Prediction of future water demands depends on the degree to which conservation effects can be anticipated. A model developed for the Corps of Engineers shows that choosing a numerical conservation target to be achieved is more meaningful and yields more predictable results than price or price elasticity manipulations. The method developed and then applied to the Kaneohe Bay region of Oahu considers the following determinants of demand: geographic distribution of the users, indoor and outdoor requirements, time - by year and month of the year, precipitation, historical unit usage rates, gross and irrigable acreage of land uses, price for water, elasticity of demand with respect to price, source of the water supply (local private supplies vs. agency supplies), and the percentage conservation savings anticipated in each future period in indoor and outdoor uses of water in each of 40 possible land uses. While developed for use in Hawaii, the model is applicable generally.