Dodging Day Zero: Drought, Adaptation, and Inequality in Cape Town

Alexander C. Abajian, Cassandra Cole, B. Kelsey Jack, Kyle Meng and Martine Visser

No 33468, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A near-catastrophic drought in Cape Town, South Africa illustrates three general implications of climate change for publicly-provided utility services. First, to reduce aggregate water demand, the public utility increased prices, leading to large demand reductions by richer households. Prior to the drought they use twice the public piped water of poorer households. At the peak of the drought, they use less. Second, some of the differential demand reduction comes from richer households substituting away from public water toward privately financed groundwater. This private adaptation both lowers the public utility's total revenue and shifts costs onto poorer households, consequences that persist after the drought abates. Third, policy interventions mitigate some of the fiscal and distributional impacts of private adaptation. These findings highlight how climate adaptation, in the context of publicly provided goods and services, can create pecuniary and environmental externalities with equity consequences.

JEL-codes: H42 O13 Q25 Q54 (search for similar items in EconPapers)
Date: 2025-02
New Economics Papers: this item is included in nep-reg
Note: DEV EEE PE
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w33468.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

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:nbr:nberwo:33468

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w33468
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by (wpc@nber.org).