EFFECTIVENESS OF DROUGHT POLICIES FOR MUNICIPAL WATER MANAGEMENT1

During the 1976–77 drought, three principal mechanisms were used to reduce water use in Utah communities: price increases, maximum monthly use restrictions, and restrictions on outdoor watering times. A regression model was developed to explain observed changes in water use, with price, type of restriction, household size, and summer rainfall as independent variables. For an average system, a 1 percent increase in price would reduce water use by 0.07 to 0.09 percent. A 1 percent increase in outdoor watering time restriction reduces use by 0.064 to 0.075 percent. A 1 percent increase in quantity restrictions leads to a reduction in water use of 0.014 to 0.054 percent. The effectiveness of rationing policies is influenced by system characteristics. For example, outdoor watering time restrictions were less effective in systems with above average household size and below average monthly use.     

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.     

PREFERENCES FOR ALLOCATING RIVER RECREATION USE1

Allocating river recreation use to commercial and private sectors on white water rivers has been highly controversial. How this process is implemented may affect not only the availability of recreation opportunities to individual users, but may also negatively impact the user's desire to escape from the pressures and stresses of everyday life. In a study of users of Idaho's Middle Fork of the Salmon River, an Even-Pool allotment technique was preferred over others by the commercial, private, and rejectee individuals sampled. A lottery technique for rationing private use permits was preferred by private users and rejectees, while commercial users preferred Advance Reservation. No relationship was found between the users' stress release/escape expectations and their preferences for the different allotment and rationing techniques studies. Such results suggest that river managers may have considerable latitude in selecting allocation techniques that do not adversely affect on-site recreation experiences.     

Managing Congestion: Economics of Price and Lottery Rationing

It is not uncommon for the carrying capacity for congestible facilities to be estimated before the allocation method is known. This paper shows how efficient capacity differs between two competing resource allocation mechanisms, one which is efficient (price) and one which is fair (lottery). The welfare theoretic implications of adopting lottery allocation rather than price allocation are illustrated from the perspectives of economic efficiency and the benefits obtained by resource users and suppliers. It is found that risk-neutral resource users will always prefer lottery allocation to price allocation. While price allocation is efficient, it is never in risk-neutral resource users» interests to have price allocation imposed. Conclusions are tested using a linear constant crowding demand function, in which case it is found that the efficient capacity for lottery rationing exceeds the efficient capacity where price is to be used to allocate a congestible resource. Objectives may be better met by joint use of allocation mechanisms, the implications of which are investigated using the linear demand model.