Volumetric water pricing, social surplus and supply augmentation

Quentin Grafton; Long Chu; Tom Kompas; Michael Ward

doi:10.1007/978-94-017-9801-3_19

Volumetric water pricing, social surplus and supply augmentation

Quentin Grafton, Long Chu, Tom Kompas, Michael Ward

Monash Sustainable Development Institute

Research output: Chapter in Book/Report/Conference proceeding › Chapter (Book) › Other › peer-review

4 Citations (Scopus)

Abstract

We evaluate the welfare losses of undertaking water supply augmentation in Sydney, Australia with a fixed, regulated water price given weather variability. Stochastic dynamic programming is used to determine dynamically efficient water prices and to estimate the losses in social surplus from premature water supply augmentation. Results show that premature water supply augmentation under the base case reduces the net present value (NPV) of the welfare of households by more than $A 3 billion, or some $A 1,900 NPV per household. While the findings are specific to Sydney, our modeling is of general interest because it could be employed to avoid costly and premature supply augmentation elsewhere.

Original language	English
Title of host publication	Understanding and Managing Urban Water in Transition
Editors	Quentin Grafton, Katherine A. Daniell, Celine Nauges, Jean-Daniel Rinaudo, Noel Wai Wah Chan
Place of Publication	Dordrecht Netherlands
Publisher	Springer
Chapter	19
Pages	401-419
Number of pages	19
Edition	1st
ISBN (Electronic)	9789401798013
ISBN (Print)	9789401798006
DOIs	https://doi.org/10.1007/978-94-017-9801-3_19
Publication status	Published - 2015

Publication series

Name	Global Issues in Water Policy
Publisher	Springer
Volume	15
ISSN (Print)	2211-0631
ISSN (Electronic)	2211-0658

Keywords

Desalination Plant
Efficient Price
Social Surplus
Stochastic Dynamic Programming
Water Price

Access to Document

10.1007/978-94-017-9801-3_19

Cite this

Grafton, Q., Chu, L., Kompas, T., & Ward, M. (2015). Volumetric water pricing, social surplus and supply augmentation. In Q. Grafton, K. A. Daniell, C. Nauges, J.-D. Rinaudo, & N. W. W. Chan (Eds.), Understanding and Managing Urban Water in Transition (1st ed., pp. 401-419). (Global Issues in Water Policy; Vol. 15). Springer. https://doi.org/10.1007/978-94-017-9801-3_19

Grafton, Quentin ; Chu, Long ; Kompas, Tom et al. / Volumetric water pricing, social surplus and supply augmentation. Understanding and Managing Urban Water in Transition. editor / Quentin Grafton ; Katherine A. Daniell ; Celine Nauges ; Jean-Daniel Rinaudo ; Noel Wai Wah Chan. 1st. ed. Dordrecht Netherlands : Springer, 2015. pp. 401-419 (Global Issues in Water Policy).

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abstract = "We evaluate the welfare losses of undertaking water supply augmentation in Sydney, Australia with a fixed, regulated water price given weather variability. Stochastic dynamic programming is used to determine dynamically efficient water prices and to estimate the losses in social surplus from premature water supply augmentation. Results show that premature water supply augmentation under the base case reduces the net present value (NPV) of the welfare of households by more than \$A 3 billion, or some \$A 1,900 NPV per household. While the findings are specific to Sydney, our modeling is of general interest because it could be employed to avoid costly and premature supply augmentation elsewhere.",

keywords = "Desalination Plant, Efficient Price, Social Surplus, Stochastic Dynamic Programming, Water Price",

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Grafton, Q, Chu, L, Kompas, T & Ward, M 2015, Volumetric water pricing, social surplus and supply augmentation. in Q Grafton, KA Daniell, C Nauges, J-D Rinaudo & NWW Chan (eds), Understanding and Managing Urban Water in Transition. 1st edn, Global Issues in Water Policy, vol. 15, Springer, Dordrecht Netherlands, pp. 401-419. https://doi.org/10.1007/978-94-017-9801-3_19

Volumetric water pricing, social surplus and supply augmentation. / Grafton, Quentin; Chu, Long; Kompas, Tom et al.
Understanding and Managing Urban Water in Transition. ed. / Quentin Grafton; Katherine A. Daniell; Celine Nauges; Jean-Daniel Rinaudo; Noel Wai Wah Chan. 1st. ed. Dordrecht Netherlands: Springer, 2015. p. 401-419 (Global Issues in Water Policy; Vol. 15).

Research output: Chapter in Book/Report/Conference proceeding › Chapter (Book) › Other › peer-review

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T1 - Volumetric water pricing, social surplus and supply augmentation

AU - Grafton, Quentin

AU - Chu, Long

AU - Kompas, Tom

AU - Ward, Michael

PY - 2015

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N2 - We evaluate the welfare losses of undertaking water supply augmentation in Sydney, Australia with a fixed, regulated water price given weather variability. Stochastic dynamic programming is used to determine dynamically efficient water prices and to estimate the losses in social surplus from premature water supply augmentation. Results show that premature water supply augmentation under the base case reduces the net present value (NPV) of the welfare of households by more than $A 3 billion, or some $A 1,900 NPV per household. While the findings are specific to Sydney, our modeling is of general interest because it could be employed to avoid costly and premature supply augmentation elsewhere.

AB - We evaluate the welfare losses of undertaking water supply augmentation in Sydney, Australia with a fixed, regulated water price given weather variability. Stochastic dynamic programming is used to determine dynamically efficient water prices and to estimate the losses in social surplus from premature water supply augmentation. Results show that premature water supply augmentation under the base case reduces the net present value (NPV) of the welfare of households by more than $A 3 billion, or some $A 1,900 NPV per household. While the findings are specific to Sydney, our modeling is of general interest because it could be employed to avoid costly and premature supply augmentation elsewhere.

KW - Desalination Plant

KW - Efficient Price

KW - Social Surplus

KW - Stochastic Dynamic Programming

KW - Water Price

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A2 - Grafton, Quentin

A2 - Daniell, Katherine A.

A2 - Nauges, Celine

A2 - Rinaudo, Jean-Daniel

A2 - Chan, Noel Wai Wah

PB - Springer

CY - Dordrecht Netherlands

ER -

Volumetric water pricing, social surplus and supply augmentation

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Volumetric water pricing, social surplus and supply augmentation

Cite this