Distributing waterʹs bounty

Following an investigation of theoretical issues and an inventory of modeling requirements, support for increasing block rates is examined empirically, through comparison to a uniform rate that includes scarce water value. Using a single-year, monthly simulation model, it is found that under conditions of scarcity, households using smaller amounts of water are better off with a uniform rate than an increasing block. Large water users have opposing preferences. Similar results arise for those household characteristics which are correlated with water use, such as income, property value, number of residents, and outdoor area of the property. For example, low-income households prefer scarcity-inclusive uniform rates over increasing block rates when scarcity is present. Therefore, in contrast to popularized opinion, increasing block rates do not place the welfare burden of conservation on large water users, nor do such rates favor low-income people in scarce-water circumstances.