Full Description

Water suppliers have been adopting new rate structures to promote conservation. There has been a shift away from rates based on historical average cost towards rates based on marginal cost. This shift has been motivated by the desire to send consumers a price signal about the need to conserve drinking water. The shift toward conservation rate structures has predictable effects: it changes who pays what and increases the variability of future revenue streams to the water agency. Though the definition of the correct rate structure varies among communities, the managerial strategies necessary to cope with the uncertainty brought about by conservation rate structures are universal. Revenue instability causes direct costs to water suppliers in the form of increased costs for borrowing, and in more complicated planning for future water supplies. This paper describes the approach used to empirically examine the experience of water agencies that have adopted conservation rate structures and proposes ways that quantitative tools may be used to measure and cope with uncertainty, and make explicit the magnitude of tradeoffs between revenue stability, equity, and the provision of incentives for efficient use of water resources.

Product Details

Published: 01/01/1994 ISBN(s): 0898677734 Number of Pages: 20File Size: 1 file , 610 KB