Funding provided by the Consumer Utility Advocacy Centre is gratefully acknowledged. We are also grateful for the research assistance provided by Craig Heiner and Katherine O'Keefe. Views expressed in this paper are those of the authors and not necessarily of CUAC.
URBAN WATER PRICING: PRACTICAL PERSPECTIVES AND CUSTOMER PREFERENCES
Article first published online: 13 APR 2010
2008 The Economic Society of Australia
Economic Papers: A journal of applied economics and policy
Volume 27, Issue 2, pages 194–206, June 2008
How to Cite
CRASE, L., O'KEEFE, S. and DOLLERY, B. (2008), URBAN WATER PRICING: PRACTICAL PERSPECTIVES AND CUSTOMER PREFERENCES. Economic Papers: A journal of applied economics and policy, 27: 194–206. doi: 10.1111/j.1759-3441.2008.tb01037.x
- Issue published online: 13 APR 2010
- Article first published online: 13 APR 2010
- Urban water;
- Water tariffs;
- Choice modelling
There is considerable variation between Australian jurisdictions in their approach to urban water and waste-water pricing. Regardless of the explicit commitments of signatories to the National Water Initiative to ‘best practice pricing’ in 2004, there are no obvious signs that a common and efficient pricing regime is emerging. This paper considers one of the dimensions of urban water tariffs: the split between ‘volumetric’ and ‘access’ charges. Given the practical difficulties of implementing a ‘first-best’ solution, the preferences of household consumers are explored using choice modelling. Results show that household consumers would prefer a tariff regime that embodies greater emphasis on volumetric charges. This approach would also be more attractive on economic grounds compared to current regimes, with their high access charges and fixed waste-water tariffs.