Pricing for water conservation with cost recovery

摘要

Variable unit pricing provides incentives for conservation, similar to increasing block rates, while covering system costs. For supply-limited situations and planning contexts, it is also shown to provide for cost recovery with supply limits and capacity constraints. This paper presents two applications of pricing with supply constraints: (1) an application for Amman, Jordan, showing that VUP satisfying a supply limit can avoid more costly capacity expansion and (2) an example of seasonal pricing for Boulder, Colorado, as an alternative to water restrictions. These two cases also exhibit two methods for generating data needs: (1) a "full information approach" with specified demand and cost functions and (2) "iterative pricing" that uses a previous year's cost and consumption data to set future pricing.