R. Quentin Grafton (email: firstname.lastname@example.org) and Tom Kompas are from the Crawford School of Economics and Government at the Australian National University, Canberra, ACT, Australia.
Pricing Sydney water*
Article first published online: 7 AUG 2007
Australian Journal of Agricultural and Resource Economics
Volume 51, Issue 3, pages 227–241, September 2007
How to Cite
Grafton, R. Q. and Kompas, T. (2007), Pricing Sydney water. Australian Journal of Agricultural and Resource Economics, 51: 227–241. doi: 10.1111/j.1467-8489.2007.00390.x
An earlier version of this paper was presented at the February 2006 AARES meeting in Sydney. We are grateful to the helpful comments of two anonymous reviewers and also Jack Pezzey, Steve Dowrick and David Campbell. We also thank Quynh Nguyen and Pham Van Ha for valuable research assistance.
- Issue published online: 7 AUG 2007
- Article first published online: 7 AUG 2007
- water pricing;
- water policy;
- urban water
The paper estimates an aggregate daily water demand for Sydney using rainfall, temperature, and price data from 2001 to 2005, and a dummy variable to account for reductions in demand following the introduction of water restrictions in October 2003. Analyses based on the estimated price elasticity, and also values one and two standard errors above and below this estimate, are used to model the effects of different pricing and water supply scenarios. The simulations indicate that without a fundamental change in water policy (pricing and supply) Sydney faces the possibility of critical water shortages in the short- to medium-term should there be a continuation of low rainfall events.