Levitt has blogged about how higher gas prices can be good for the country. Are higher water prices next?
Mercatus Center economist David Zetland argues that California’s water supply problems are really just water pricing problems. He recently called for a new price structure that would punish water guzzlers and encourage conservation.
Currently, Los Angeles residents pay just $2.80 for the first 885 gallons they use per day, and $3.40 for the next 885. Under Zetland’s plan, the first 75 gallons per day would be free, and each additional 75 gallons would cost $5.60. To get a sense of scale, consider that the average Los Angeles household of three uses 350 gallons of water a day, according to Zetland — that’s about seven bathtubs full.
Tap water is still far cheaper per gallon than bottled water. But would higher prices at the tap be as influential in changing water consumption as higher prices at the pump?
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per day or per month?
I think higher water prices in areas that have a water shortage make a lot of sense. I have family in Arizona. They have a green lawn and a pool. Really? If you choose to live in the dessert you should get over the need to maintain a glorious green suburban lawn.
Of course, there are consequences. If high water costs are factored into the cost of living & manufacturing in a certain geographies, then people and companies will have to make hard choices. There could be a mass exodus in areas where water is scarce.
As water is a needed resource for everybody, why not make water pricing based on ability to pay, as well on consumption. Therefore the poorer household can still afford to bathe, drink etc. so long as they do not over consume. Thus a higher income household will pay more for their water, and also have consumption costs associated with it. Im not saying make the higher income households pay dramatically more for water, but I dont think it would damage their spending habbits paying slightly more for water as compared to a welfare household.
If prices are too low, then who is paying for all the reservoirs, aqueducts, and other infrastructure necessary to bring Las Angeleans their water?
If the water users pay what is necessary to fund the infrastructure, then the market will adjust. If water is subsidized by taxes… well, there’s your problem. Remove the subsidies. Let the users pay the bill.
I live in LA County and the standard here for rentals is that the landlord pays for water and trash. I’m not sure, but I have the feeling it’s the law.
So right now for renters in LA County, water is essentially free… at least the variable cost.
Limits, limits, limits. Raise prices arbitrarily. The first knee-jerk reaction is to place limits and raise prices. How about building more infrastructure to bring in more water? I agree with a previous poster about removing subsidies. For some reason, water companies are legal monopolies. Everyone hates monopolies, right?
Sandi said, “If you choose to live in the dessert (sic) you should get over the need to maintain a glorious green suburban lawn.” Sandi, are YOU going to decide what’s good for people? Should you be in charge and figure out what millions of us “need” or “want” or “pay for?” Clearly, you’re not in any position to do those things.
@Jim F
I think the pricing should stay the same but there should be government subsidies for poorer families.
Free Marketer, the problem is that there isn’t enough water so all the infrastructure won’t help. Get it? It’s a problem of scarcity. It’s the central concept of economics. You might want to look into it. Sandi is not deciding what you “need” or “want.” You can blame God for that for not putting enough water in the desert. Given that reality, to achieve the most efficient allocation of water resources, the price will need to be raised and people are free to make the choice between drinking, bathing, and having a green lawn.