Western urban water demand

Abstract

Increasing concern with sustainability issues has raised questions regarding western water use. Efficient water allocation requires policy tools based on the value of water in alternative uses: agriculture environmental, residential, and others. Agricultural values are fairly well established. Environmental values are recognized as "non-market" and estimated with various alternative techniques. Residential uses are normally thought to be market determined, but these markets are often restricted, allowing the possibility that water charges may not accurately reflect the value of water. This article reviews the history of urban residential water data analyses in order to address this and related issues and to ascertain the efficacy of extant databases. We then investigate the viability of estimated demand relationships and the robustness of these estimates to potential policy needs. We also discuss relevant conceptual issues for effective water policy formulation and their role in remedying data inadequacies and provide some gross estimates for water prices that include all relevant costs. Finally, we synthesize the data review and conceptual issues to identify the requirements for broadening the urban-residential water database. Efficient water pricing in environments where water is "scarce" relies on rules that modify extant pricing practices to include a scarcity value. The process has implications for empirical analyses; therefore, we sketch some alternatives for conducting these analyses that could assist policy makers in making difficult water pricing decisions.