Disadvantage of Water Restriciton

Topics: Supply and demand, Economics, Water resources Pages: 2 (656 words) Published: September 21, 2011
Part 3: disadvantages, related to the water restriction:
However,Roberts, R,. Mitchell, N, & Douglas, J(2005)propose that the water restriction leads to some issues and concerns. Some economic costs, related to water restriction can be borne inappropriate distribution by certain consumers. (Roberts, R,. Mitchell, N, & Douglas, J,2005) In recent years, as the result of imposing the water restriction, some cities have to establish a ban on outdoor water use. But National Water Commission (2008), proposes that the method may not be fair for particular consumers. They indicate that “the commission regards long-term temporary water restrictions as an inequitable and inefficient way of balancing supply and demand” (National Water Commission, 2008, para. 4).

1. Water restriction may lead to an inequitable on water market: In order to face the restriction on water use, a ban on outdoor water use may lead to a lower supply, and it may lead to a higher price. Increasing on price would affect consumers whose least well- off. (Donohue, J, O., Ward, M, &Grafton, Q, 2011, p2). And in contract to common condition for price based demand, for common goods, such as water, “scarcity pricing can provide welfare gains across the full distribution of consumers, comparing with allocation by water restrictions” (Donohue, J, O., Ward, M, &Grafton, Q, 2011, p2). The proposal says offering different water pricing is the best way to encourage economizes on water use. It recommends “scarcity pricing”, which means that residents pay more for water in peak times, and less when it’s not highly demanded. With the peak pricing policy being introduced, governments would not intervene to keep prices low with pricing cap. To facilitate this, each unit for living could have their own water meters and bills, instead of being metered en masse, and it would be lead to a more equitable way to pay for the water resource, instead of the same restriction on whole residents. (National...
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