A Shortage of Water at P = Po
There is, and has been for some time, a drought is southern England. The effect has been that, with water pricing being inflexible, shortages have developed at current prices. And of course there would be a massive outcry if the water companies were to raise the rates. For example, when I tried to point out to a colleague how higher water prices would encourage people to conserve water, his response was, "Hey, wait a minute... then water would cost me more money."
My students and I are meeting with people from the local water company this coming Friday, where we will learn about their long-run strategies for dealing with the shortages. I fully expect political realities (a euphemism for popular ignorance about how markets work) to obscure the economic efficiency of using prices to ration water.
I find it dismaying, to say the least, that water pricing is so rarely mentioned around here as a rationing device. Here is a recent article from the Telegraph in which their "environment editor" writes about what should be done to ease the drought conditions. Never, not once, does he mention raising the price of water so that people cut out their less highly valued uses. Save us from such editors.
Oh, and here's an indication of some of the dryness in the area.
My students and I are meeting with people from the local water company this coming Friday, where we will learn about their long-run strategies for dealing with the shortages. I fully expect political realities (a euphemism for popular ignorance about how markets work) to obscure the economic efficiency of using prices to ration water.
I find it dismaying, to say the least, that water pricing is so rarely mentioned around here as a rationing device. Here is a recent article from the Telegraph in which their "environment editor" writes about what should be done to ease the drought conditions. Never, not once, does he mention raising the price of water so that people cut out their less highly valued uses. Save us from such editors.
Oh, and here's an indication of some of the dryness in the area.
Category: Economics Posted on
Wednesday, May 17, 2006 at 1:46am
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Our water and sewer bills are linked. Our water is metered and up until the sewer hook-up was fairly constant month over month. We paid the basic charge. The sewer charges are linked directly to the water usage. The more water you use, whether for dishes, laundry or gardens and lawn, the higher the sewage charge. I never really considered this, but everyone of my neighbors, when I told them we were hooking up the city sewer, explained how our water bill would now go up. They conserved water, just as we will, at least for now. When we get our first water bill, we may reconsider our water usage.