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Why districts are slow to charge market rates for water (2009)

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Re: Why districts are slow to charge market rates for water (2009)

#41

Post by RobinL »

joe_the_user wrote: post #12

Headline: Why districts are slow to charge market rates for water." P1: Why don’t districts pass the marginal costs of water on to their constituents? P2: HAH! Do you see what I did there? [switch constituents with customers] Me: Actually, the thing I notice is the switch from "market costs" to marginal costs. It should be obvious that "market costs" are fiction for water districts since these districts are virtually…

Economist here. Imo the market rate would be the price at which supply and demand were equal.

In this case, the government should choose the supply such that it's ecologically sustainable. So the price is the price at which that sustainable level of water usage is demanded by the market.

That would not count as monopoly pricing, which would instead set the price to maximize revenue

Re: Why districts are slow to charge market rates for water (2009)

#42

Post by Scoundreller »

One thing I liked about Cleveland's water rates is that they charge based on "the distance and elevation of your home and business from Lake Erie."

So if your water requires more pumping distance and elevation, and the more piping's involved, the more you pay.

https://www.clevelandwater.com/customer-service/water-rates/...

Re: Why districts are slow to charge market rates for water (2009)

#43

Post by rocqua »

pvdoom wrote: post #39

Or maybe these things shouldn't be a subject to markets in the first place.

They should, because water is scarce. Like the article says, have a low rate for an amount that covers basic needs. But raise rates for usage above that. Discourage fountains wasting water. Ideally (though it won't happen probably) make farmers pay higher rates for the water they use.

Re: Why districts are slow to charge market rates for water (2009)

#44

Post by rocqua »

joe_the_user wrote: post #12

Headline: Why districts are slow to charge market rates for water." P1: Why don’t districts pass the marginal costs of water on to their constituents? P2: HAH! Do you see what I did there? [switch constituents with customers] Me: Actually, the thing I notice is the switch from "market costs" to marginal costs. It should be obvious that "market costs" are fiction for water districts since these districts are virtually…

> How could "market rate" mean anything for water?

Water is limited. And water use above basic needs has clear economic value. Besides water is a commodity. Water should be one of the easiest things to price.

There is a base level of water each person needs. That is inelastic demand, and an abomination to price gouge. But most water usage isn't these basic needs. That makes it decently easy to protect these basic needs.

Re: Why districts are slow to charge market rates for water (2009)

#45

Post by rocqua »

bombcar wrote: post #27
eru wrote: post #13

Earlier quoted context omitted.

On the one hand, if water is so cheap, why do you need to punish people for using a bit more of it, then? On the other hand, if water is so scarce that you need to discourage people from using a bit extra, why do you price it so cheap in the first place?

Because like other utilities, homeowners often get vastly subsidized usage. Which can be fine until it starts running out.

I believe that, in the case of water, homeowners tend to pay high prices, whilst farners get incredibly low prices and businesses can usually get sweetheart deals if they are big enough.

Re: Why districts are slow to charge market rates for water (2009)

#46

Post by rocqua »

RetroHippyNimby wrote: post #24

Why is there a market rate for water? Shouldn't there be a cost for water without a market? We shouldn't be selling water at whatever the market will bear, but whatever the cost is to produce clean water (or less). Whatever amount prevents waste but allows everyone access to clean, potable water should be the what is charged.

There is (approximately) no cost of production for water. There is only a cost of extraction. The difference being that there is a limit to how much you can extract. On other words, you can run out of water.

Running out of water is horrible, so it needs to be prevented. Using prices to signal scarcity is generally the least worst solution. In other words, you shouldn't just pay the cost of extraction, but also some of the opportunity cost of everyone else not being able to use your water.

Re: Why districts are slow to charge market rates for water (2009)

#47

Post by rocqua »

charlie0 wrote: post #34
bin_bash wrote: post #6

99% Invisible did a podcast recently where they talked about a very similar issue: the privatization of parking meters in Chicago. Parking meters have a similar problem. The purpose is for drivers to pay their fair share to use some real estate in a city, however the city and elected officials in charge have a vested interest to keep prices low . Nobody wants to be the mayor known for raising parking rates. Privatiza…

Changing water price on demand is not easy, but I can see dynamic pricing on parking meters ranging from free suring periods of very low usage to a few dollars a hour during high usage.

The infrastructure for pricing electricity on demand already exists, at least where I live. And that is rolled out to all private residences. Why couldn't that be done with water?

Re: Why districts are slow to charge market rates for water (2009)

#48

Post by eru »

pvdoom wrote: post #40
eru wrote: post #9

Earlier quoted context omitted.

Water economics are weird. Not because of anything directly in the economics, but because people have really weird ideas and emotional attachments. So instead of charging a market rate proportional to usage (plus a fee to access the network etc, and giving poor people money to afford all this), there's all kinds of weirdness and grandstanding. See https://slatestarcodex.com/2013/08/25/fake-consensualism/ for a wider…

Those examples you give are absolutely things that should be taken into account for - i.e. watering your lawn or filling your pool should be much more expensive than other uses.

Why?

For the rest of the community, it doesn't matter whether you water you fill your swimming pool or flush the toilet a few extra times. Or does it?

Re: Why districts are slow to charge market rates for water (2009)

#49

Post by karmakurtisaani »

bin_bash wrote: post #10
jandrese wrote: post #7

Earlier quoted context omitted.

Sounds kind of like Ticketmaster. "Oh, the rates went up, that's not our fault, it's this private company." "Oh, so you're getting all of the extra money then?" "Not so much, well, the guy who set up the deal got a big personal payday, but we are getting only a tiny sliver of the ongoing extra revenue."

sort of, yeah, Ticketmaster sort of sells "accountability as a service" so fans don't get mad at the artists. I'm a centrist, but things like this push me further to the right personally. Governments can't charge what they ought to for parking/water and the people ultimately suffer the consequences.

Careful with the left-right thinking here. Can you be sure the upfuckery in this case was due to the leanings of the politicians, that the other party would have done it any differently, and most importantly, the right wing thinking would not cause other side effects (I.e., you lean to right to avoid this kind of garbage, but end up effectively supporting Trump and his flavour of garbage)?

Re: Why districts are slow to charge market rates for water (2009)

#50

Post by bin_bash »

charlie0 wrote: post #34
bin_bash wrote: post #6

99% Invisible did a podcast recently where they talked about a very similar issue: the privatization of parking meters in Chicago. Parking meters have a similar problem. The purpose is for drivers to pay their fair share to use some real estate in a city, however the city and elected officials in charge have a vested interest to keep prices low . Nobody wants to be the mayor known for raising parking rates. Privatiza…

Changing water price on demand is not easy, but I can see dynamic pricing on parking meters ranging from free suring periods of very low usage to a few dollars a hour during high usage.

Parking rates simply needed to be higher, not dynamic.

Not saying dynamic pricing is not useful though.

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