Chicago's water market: dynamics of demand, prices and scarcity rents

Viju Ipe and Subhash Bhagwat

Applied Economics, 2002, vol. 34, issue 17, 2157-2163

Abstract: Chicago and its suburbs are experiencing an increasing demand for water from a growing population and economy and may experience water scarcity in the near future. The Chicago metropolitan area has nearly depleted its groundwater resources to a point where interstate conflicts with Wisconsin could accompany an increased reliance on those sources. Further, the withdrawals from Lake Michigan is limited by the Supreme Court decree. The growing demand and indications of possible scarcity suggest a need to reexamine the pricing policies and the dynamics of demand. The study analyses the demand for water and develops estimates of scarcity rents for water in Chicago. The price and income elasticities computed at the means are -0.002 and 0.0002 respectively. The estimated scarcity rents ranges from $0.98 to $1.17 per thousand gallons. The results indicate that the current prices do not fully account for the scarcity rents and suggest a current rate with in the range $1.53 to $1.72 per thousand gallons.

Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/00036840210138383 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:applec:v:34:y:2002:i:17:p:2157-2163

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036840210138383

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().