Estimating stakeholder benefits of community water system regionalization

Community water system regionalization (CWSR) provides small community water systems with a solution to the conundrum of large fixed costs and a small rate base. In practice, however, very few systems actually regionalize. Applying social welfare theory, this article estimates stakeholder benefits f...

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Bibliographic Details
Published in:Journal - American Water Works Association 2013-10, Vol.105 (10), p.E561-E567
Main Author: Hansen, Jason K.
Format: Article
Language:English
Subjects:
Average cost
Case Studies
Communities
Community
Consumer economics
Consumer prices
Cost Savings
Customers
Economic benefits
Economics
Economies of scale
Fixed costs
Groundwater
New Mexico
Producer surplus
Regionalism
regionalization
small community water system
Small Water Systems
stakeholders
Utility rates
Water consumption
Water management
Water Systems
Water utilities
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Summary:Community water system regionalization (CWSR) provides small community water systems with a solution to the conundrum of large fixed costs and a small rate base. In practice, however, very few systems actually regionalize. Applying social welfare theory, this article estimates stakeholder benefits from CWSR. Results are reported for three New Mexico communities as case studies in which CWSR was hypothetically imposed. Benefits for consumers are non-negative across price scenarios, but in some cases producer benefits are negative. The findings suggest that reluctance to regionalize is not in consumers' economic interest, but it may be for producers. Depending on the water price that follows CWSR and savings achieved by economies of scale, consumers gain at producers' expense. The results shed light on issues that policymakers should consider when evaluating the merits of CWSR. Producers' historic reluctance to adopt CWSR may in fact be driven by economics.
ISSN:0003-150X
1551-8833
DOI:10.5942/jawwa.2013.105.0105