Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Air well (condenser) wikipedia , lookup
Water testing wikipedia , lookup
Freshwater environmental quality parameters wikipedia , lookup
Water quality wikipedia , lookup
History of water supply and sanitation wikipedia , lookup
Camelford water pollution incident wikipedia , lookup
Wastewater discharge standards in Latin America wikipedia , lookup
Chapter 13. The Economics of Water • • • • • • • The Value of Water Water as a Public versus a Private Good Water Affordability Water Marketing Water Banking Pollution Fees and Credits Environmental Values The Value of Water • A resource is cheap when it is plentiful: – The price goes up as it becomes scarce – This is a scarcity value – The water-diamond paradox • As the price goes up, we begin to substitute: – one product for another – one location for another • We can also become more efficient Role of Governments • As water provider: – Many utilities are started for the purpose of providing water and wastewater services – These are needed to promote industry and development – Water is subsidized in the West to promote development – TVA developed the dams in Tennessee for development • As water regulator: – Must allocate based on efficient and equitable uses – Must protect the environment Chapter 13. The Economics of Water • • • • • • • The Value of Water Water as a Public versus a Private Good Water Affordability Water Marketing Water Banking Pollution Fees and Credits Environmental Values Public vs. Private Good • A public good or shared resource – One that the general public benefits from, but this use does not interfere with or diminish the use by others – Examples: air, water recreation, national defense • A private good or commodity – One that can not be shared with others – Examples: milk, gas Public vs. Private Use • Public Uses: – Uses of water that benefit the general public – Examples: fountains, rivers, lakes • Private Uses: – Uses that benefit individuals – Examples: agriculture, industries, water mill • According to most economists, letting the market put a price on water is a way to ensure it is used efficiently Privatization • The delegation of water management to the private sector – Private water utilities that manage water and wastewater – Water marketing - used to transfer water between sectors Privatization • Private companies provide 15% of US water services • In 1999, Atlanta decided to privatize city’s water system • United Water, a subsidiary of Suez (French company) received a 20-year lease • Responsible for – 1 drinking water treatment plant – 3 wastewater treatment plants – Water distribution system, maintenance, and billing Privatization • United Water would recieve $21.4 million in annual revenue • Projected savings to Atlanta over 20-year lease was $400 million • January 2003, Atlanta withdrew lease – Higher than expected operation & maintenance costs – Poor water service – Water quality problems Chapter 13. The Economics of Water • • • • • • • The Value of Water Water as a Public versus a Private Good Water Affordability Water Marketing Water Banking Pollution Fees and Credits Environmental Values Water Affordability • 1.1 billion (out of world population of almost 7 billion) people do not have access to safe drinking water • Average cost of water in US is 0.5% of income – Since price is fixed, for low-income people it is a higher % of income • In 1990’s, France passed laws to guarantee access to water – Could not cut off water to homes with children or elderly Water Affordability • Average residential water use in US – – – – Toilets Bath and shower Washing machine Outdoor use 36% 28% 20% 16% • Some water agencies have increased cost to residential users to reduce consumption • States (including GA) have passed laws to require low-flow toilets in new homes Chapter 13. The Economics of Water • • • • • • • The Value of Water Water as a Public versus a Private Good Water Affordability Water Marketing Water Banking Pollution Fees and Credits Environmental Values Water Marketing • In the US water marketing is common in western states – Between individual irrigators – Between irrigators and cities – Between irrigators and industry • Conflict between desire to use local resource for economic benefit and concept that water is a public resource Water Marketing • Unregulated water markets – Farmer sells his water to city • Farmer makes a lot of money • City builds a lot of homes – The local economy goes broke • The county where the farmer sold his water loses the taxes the farmer paid • The local businesses that depended on the fertilizer, feed, seed, farm equipment loses his business • These are indirect impacts Water Marketing • Regulated water markets – Water transfers restricted to county of origin – Water transfers restricted to type of use • i.e., Ag to Ag, City to City, Industry to Industry – Non-local water transfers must be approved by the local county of origin Water Marketing Australia • Murray-Darling Basin – – – – – – Australia’s largest river system 19 inches annual rainfall 50% of Australia’s cropland 75% of Australia’s irrigated land 10% of population 3 states: New South Wales, Queensland, & Victoria • Murray-Darling Basin Commission established in 1917 to manage water Water Marketing Australia • Until 1980’s water use for irrigation was unlimited – Shortages, low river flow, and salination of soils became a problem • 1981 limits were imposed and trading was allowed – By mid-1990’s water was selling for $86 per acre-foot per year Chapter 13. The Economics of Water • • • • • • • The Value of Water Water as a Public versus a Private Good Water Affordability Water Marketing Water Banking Pollution Fees and Credits Environmental Values Water Banking • The state buys and sells water resources – Takes surplus and/or unneeded water – Stores it and then sells it to users • Lakes for surface water • Aquifers for ground water – Can also require that a certain percentage (say 10%) of every private water transfer goes into the bank - a transfer tax. Chapter 13. The Economics of Water • • • • The Value of Water Water as a Public versus a Private Good Water Affordability Water Marketing – Surface water marketing – Ground water marketing • Water Banking • Pollution Fees and Credits • Environmental Values Pollutant Trading • Cap and trade • A cap is placed on how much point sources can emit (lbs of phosphorus per year, for example) • If a point source is emitting less than cap then they can sell excess credits (in lbs of phosphorus) • If a point source is exceeding the cap they have 2 choices: – Install advanced technology to remove pollutants – Buy credits from point source that has credits to sell Pollutant Trading • Price is determined by buyer and seller • Trades are restricted to watershed • Free market determines the most efficient way in terms of cost to reduce total pollutant load in watershed • Trades between point sources are common • Trades between point sources (buyers) and nonpoint sources (sellers) less common due to uncertainty in nonpoint source controls Pollutant Trading • Trading system in the Tar-Pamlico River basin in North Carolina – Nitrogen and phosphorus credits – Mostly point source trades • Trading system in the Murray-Darling basin – Salinity credits Chapter 13. The Economics of Water • • • • The Value of Water Water as a Public versus a Private Good Water Affordability Water Marketing – Surface water marketing – Ground water marketing • Water Banking • Pollution Fees and Credits • Environmental Values Environmental Values • What is the economic value of improved water quality or leaving more water in streams to support wildlife? – Difficult question for economists – Use studies that measure “willingness to pay” – What is the value of “ecosystem services” Summary • The value of water increases as it becomes more scarce • Two views of water: a public resource or a private good • Water markets have been used to allocate water • Assigning an economic value to environmental value of water is difficult