Welfare and Distribution Effects of Water Pricing Policies

Arbeitspapier

In this paper, distribution and welfare effects of changes in block price systems are evaluated. A method is discussed to determine, for a Marshallian demand function, equivalent variation in case of a block price system. The method is applied to analyze welfare and distribution effects of changing water prices in the Metropolitan Region of São Paulo. Results show that there is a trade off between average welfare and income distribution. A pro-poor price system may result in lower average welfare than a flat price system, but in higher individual welfare for the poor. Moreover, there is a trade off between revenues for the water company and income distribution. Even though pro-poor price systems may not be as good for average welfare as flat price systems, their direct effects on poverty are important. Introducing pro-poor price systems, however, may have financial consequences for the water companies.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 92.2007

Classification and Topics

• Classification: Wirtschaft ; Equity, Justice, Inequality, and Other Normative Criteria and Measurement ; Renewable Resources and Conservation: Water ; Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
• Subject: Water Demand ; Welfare Economics ; Equivalent Variation ; Wasser ; Nachfrage ; Wasserpreis ; Wohlfahrtsanalyse ; Mikroökonomische Konsumfunktion ; Sao Paulo (Stadt)

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Ruijs, Arjan
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/74140
• Last update: 10.03.2025, 11:41 AM CET