Abstract:
In many Australian cities, restrictions on water use have recently been in place for prolonged periods. This paper examines the role of residential restrictions in efficient urban water management. Gaps in empirical evidence on the costs of restrictions limit the achievement of efficient outcomes. A case study demonstrates the uncertainty of estimating the costs of restrictions using benefit transfer and consumer surplus methods. Scarcity-based pricing has potential as an alternative to restrictions, but more information would be required to assess equity and distributional concerns. The paper concludes that more empirical evidence about the impacts of restrictions is required to inform urban water management, and there is a need for extending the methods for eliciting preferences about and attitudes towards restrictions.
