Measuring the Welfare Losses from Urban Water Supply Disruptions
Steven Buck,
Maximilian Auffhammer,
Stephen Hamilton () and
David Sunding ()
Additional contact information
Stephen Hamilton: Department of Economics, California Polytechnic State University
David Sunding: Department of Economics, University of California, Berkeley
No 1502, Working Papers from California Polytechnic State University, Department of Economics
Abstract:
The paper evaluates welfare losses from urban water supply disruptions. The analysis incorporates important features of the water industry that may cause the initial allocation of water to be inefficient, namely that ther are a large number of retail-level water utilities, and that mosst water utilities engage in a form of average cost pricing where volumetric rates are used to finance fixed expenses. We consider a sample of 53 urban water utilities in California collectively providing service to over 20 million customers. We calculate shortage losses for these utilities using existing water rates and utility-specific price elasticities dervied from a demand estimation based on a panel data set of 37 California water utilities. Welfare losses for an annual 10% shortage ranging from an average of $1,458 per acre-foot of shortage to an average of $3,426 per acre-foot of shortage for a 30% supply disruption. The results indicate a household-level willingness-to-pay to avoid an annual shortage of approximately $60 to $600 depending on the shortage size and location. Beyond average losses, we also find evidence that there is substantial variation in shortage losses across utilities. For a 30% supply disruption, for example, the standard deviation across utilities of mean annual losses per acre-foot is $4,102.
Pages: 53 pages
Date: 2015
New Economics Papers: this item is included in nep-reg and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)
Downloads: (external link)
https://drive.google.com/file/d/1SiJzUF_-_UdGSI01g ... /view?usp=drive_link First version, 2015 (application/pdf)
Related works:
Journal Article: Measuring Welfare Losses from Urban Water Supply Disruptions (2016) 
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:cpl:wpaper:1502
Access Statistics for this paper
More papers in Working Papers from California Polytechnic State University, Department of Economics
Bibliographic data for series maintained by Matthew Cole ().