51–60 of 66 posts
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…
The article is confused. Market pricing and conservation pricing are related but still different. I’m in Dallas. We have months long periods almost every year where all our lakes are so overfull, we’re simply dumping excess water down the Trinity River to Houston’s Lake Livingston, which during those periods is typically well over capacity, too. There’s no reason to conserve during those times. Want to grow a rain fo…
Sounds like you just need different prices in different times of the year? Just like electricity often has different prices during different parts of the day?
Earlier quoted context omitted.
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?
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.
So you will still end up with rich people watering their lawns, but people with less income will have to suffer. I think this is better handled through heavy taxation and outright bans rather than trying to get an already finicky thing like a market to solve it.
Earlier quoted context omitted.
The people who were paying $1000/hr were people who had selected an energy plan where they paid the wholesale rate. Normally that rate was a small fraction of the typical retail rate, but the risks should have been obvious to anyone of moderate intelligence. Playing the lottery - small downside, huge (albeit improbable) upside. Buying wholesale power unhedged - small upside, huge downside, and not all that unlikely -…
Clearly the solution is to get two electric meters, sign one up for normal rates, and sign the other one up for spot rates. And switch between them to use whichever is cheaper. I joke, but only somewhat. This whole model is pretty clearly at least a bit broken. I don’t believe for a second that electricity cost $1k/kWh in any way that truly makes sense. Perhaps marginal electricity cost that much, but that’s a very d…
Plenty.
E.g. a well argued defense of the current energy-only marginal pricing model: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4087528
Or something different?: https://doi.org/10.1016/j.tej.2019.02.010
one side effect of Proposition 218, put forth by the Howard Jarvis Taxpayers Association, was that it became illegal to charge any household more than the costs of conveyance to that parcel. It was illegal to charge punitive rates to send a price signal to wasteful users. Why does punishing wasteful users require charging them more per unit? If I waste a lot of milk, like by bathing in it, I'm punished by having spen…
Because water is so cheap (cheaper than dirt) that it’s not punitive at all to pay for twice or ten or a hundred times normal.
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 nee…
Individual citizen consumption has nothing to do with prices, and their average usage is meaningless.
States and large water rights ventures fight over all these, and farmers are extremely incentivized to keep growing anything year round to consume at or above but never below their water allocation and right.
Earlier quoted context omitted.
Here you find yourselves at the crossroads. Everyone needs water to live. The actual price of water, fairly pricing in long term externalities, may be too much for a family of four to afford their 8 or 10 kgals a month. At least for many such families. But when you price it at the marginal cost to pump out the extra gallon, it becomes economical to do silly stuff like grow water intensive crops in the desert and draw…
> Everyone needs water to live. The actual price of water, fairly pricing in long term externalities, may be too much for a family of four to afford their 8 or 10 kgals a month. At least for many such families. Depends on where you live. And perhaps we shouldn't encourage people to live in such dry areas where an honest pricing of water would make living unaffordable? > But when you price it at the marginal cost to p…
one side effect of Proposition 218, put forth by the Howard Jarvis Taxpayers Association, was that it became illegal to charge any household more than the costs of conveyance to that parcel. It was illegal to charge punitive rates to send a price signal to wasteful users. Why does punishing wasteful users require charging them more per unit? If I waste a lot of milk, like by bathing in it, I'm punished by having spen…
Because there is a highly nonlinear utility of water, where enough to drink and cook is essential for survival, enough to bathe and wash is essential for a decent life, and then... nothing. If milk was $200 a gallon you could simply not buy any and you'd be fine, which is not the case with water.
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…