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Untangling the price, cost and value of water

Untangling the price, cost and value of water. David Zetland. Aguanomics. The law of demand (shifts and slides!). There’s no diamond-water paradox. I know price. Do you know value?. Market vs. non-market values. Fixed prices affect quantity demanded, and

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Untangling the price, cost and value of water

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  1. Untangling the price, cost and value of water David Zetland Aguanomics

  2. The law of demand(shifts and slides!)

  3. There’s no diamond-water paradox

  4. I know price. Do you know value?

  5. Market vs. non-market values • Fixed prices affect quantity demanded, and • Markets use prices to reconcile demands, but • Non-market values cannot be priced, so • Environmental water should be set aside, and • Economic water should be priced!

  6. Prices, costs and value • Prices can be above or below cost (by fiat) • Costs include OpEx, CapEx and resource rents • Values cannot be known but can be reconciled • Low prices take resources from tomorrow or deplete the environment today • Advice: Uniform tariffs for all customers and income supports for special cases

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