Pricing as a demand‐side management tool: Implications for water policy and governance

Abstract

Full‐value or ‐cost pricing and conservation pricing as demand‐side management tools are examined along with the benefits of maintaining responsive and transparent government and the benefits realized as a result of such practices.

The Cost of Stability: Consumption‐Based Fixed Rate Billing for Water Utilities

“…While a proportional system yields bills more responsive to a customer's consumption, it depresses prices too much below the IBR rates such that any conservation or scarcity pricing currently in place is eliminated. With water prices accounting for only 0.5 to 0.6% of the average U.S. family's household budget (Mehan III and Kline ), higher, not lower prices seem necessary to induce water conservation–especially for high‐income consumers– in water‐scarce environments. For now, a “SCBFR” (Scaled Consumption‐Based Fixed Rates) system seems the best option for ensuring revenue stability for the water utility without jeopardizing affordability for low‐income households.…”

“…T he United States depends heavily upon public infrastructure for its water supply; 83% of Americans rely on publicly owned, large‐scale water utilities to supply them with potable water and treat their wastewater (Rahill‐Marrier and Lall ). While American customers pay some of the lowest water rates among developed nations (Mehan and Kline ), the country's water infrastructure faces an annual 11 billion dollar deficit to replace aging facilities and bring water supply quality up to code with environmental health regulations (Rahill‐Marier and Lall ).…”

Further development of a conceptual framework for assessing resilience at the community scale

“…Another economic capacity factor that may be discussed is the role of full-cost pricing in water infrastructure finance. Mehan and Kline (2012) discuss the fact that water rates in the United States are quite low, in part, due to the state and federal grants that had been made available during the construction of these systems. As a result, a "subsidy mentality" may have developed, leaving many systems underfinanced.…”

The costs and benefits of water demand management: evidence from New Zealand

“…Savings may also exist for households due to reduced energy requirements, for in‐house hot water heating. Additionally, there are wider economic benefits for the community and the environment (Mehan & Kline ). Despite increasing recognition of the wide range of benefits possible through WDM, there are few published works readily accessible to water managers which lay out the concepts and methods through which an assessment of WDM initiatives can be made.…”