Unintended consequences of increasing block tariffs pricing policy in urban water

Momi Dahan*, Udi Nisan

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

57 Scopus citations

Abstract

[1] We exploit a unique data set to estimate the degree of economies of scale in water consumption, controlling for the standard demand factors. We found a linear Engel curve in water consumption: each additional household member consumes the same water quantity regardless of household size, except for a single-person household. Our evidence suggests that the increasing block tariffs (IBT) structure, which is indifferent to household size, has unintended consequences. Large households, which are also likely to be poor given the negative correlation between income and household size, are charged a higher price for water. The degree of economies of scale found here erodes the effectiveness of IBT price structure as a way to introduce an equity consideration. This implication is important in view of the global trend toward the use of IBT.

Original languageAmerican English
Article numberW03402
JournalWater Resources Research
Volume43
Issue number3
DOIs
StatePublished - Mar 2007

Fingerprint

Dive into the research topics of 'Unintended consequences of increasing block tariffs pricing policy in urban water'. Together they form a unique fingerprint.

Cite this