Comparing Price and Non-price Approaches to Urban Water Conservation

Sheila M. Olmstead () and Robert Stavins

RFF Working Paper Series from Resources for the Future

Abstract: Urban water conservation is typically achieved through prescriptive regulations, including the rationing of water for particular uses and requirements for the installation of particular technologies. A significant shift has occurred in pollution control regulations toward market-based policies in recent decades. We offer an analysis of the relative merits of marketbased and prescriptive approaches to water conservation, where prices have rarely been used to allocate scarce supplies. The analysis emphasizes the emerging theoretical and empirical evidence that using prices to manage water demand is more cost-effective than implementing non-price conservation programs, similar to results for pollution control in earlier decades. Price-based approaches also have advantages in terms of monitoring and enforcement. In terms of predictability and equity, neither policy instrument has an inherent advantage over the other. As in any policy context, political considerations are important.

Keywords: cost-effectiveness; water conservation; market-based approaches; policy instrument choice; water price (search for similar items in EconPapers)
JEL-codes: L95 Q25 Q28 Q58 (search for similar items in EconPapers)
Date: 2008-06-15
New Economics Papers: this item is included in nep-agr, nep-env and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Comparing Price and Non-price Approaches to Urban Water Conservation (2008)
Working Paper: Comparing Price and Non-Price Approaches to Urban Water Conservation (2008)
Working Paper: Comparing Price and Non-price Approaches to Urban Water Conservation (2008)
Working Paper: Comparing Price and Non-Price Approaches to Urban Water Conservation (2008)
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