Abstract
Understanding the regional economic implications of rising water and wastewater services is important, because these services are household necessities. To date, however, there are few (if any) studies examining the link between water costs and indicators of economic vitality such as jobs, output, and regional income. To advance work on this particular topic, this paper proposes a novel methodology that estimates changes in household spending information from the Consumer Expenditure Survey (CES) for a particular change in water prices. This vector of final demand changes is then linked to multi-regional input-output (MRIO) models to estimate the regional economic impacts associated with changes in consumer spending patterns. To demonstrate this methodology, three water price increase scenarios are derived, and associated changes in final demand estimated.
Highlights
The cumulative infrastructure grade for the United States is a D+ 1 (American Society for Civil Engineers, 2017b)
As infrastructure reaches the end of its useful life - and it is increasingly infeasible for utilities to defer the costs of maintenance and upgrades - it becomes more likely that bills for drinking water and wastewater services will rise (Forer and Staub, 2013)
Data for Phoenix indicate a rise in water prices between 2010-2011, 2012-2013, 2015-2016, as well as 2016-2017 (Walton, 2017)
Summary
The cumulative infrastructure grade for the United States is a D+ 1 (American Society for Civil Engineers, 2017b). The country’s drinking water and wastewater systems received (c) Southern Regional Science Association 2019 ISSN 1553-0892, 0048-49X (online) www.srsa.org/rrs. Aging drinking water infrastructure and growing demand for wastewater pose financing challenges for the utility industry since the required investments necessary to maintain and upgrade systems have been estimated to exceed $1 trillion (American Water Works Association, 2012). Recent rate analyses for the 30 largest utilities in the U.S find a median increase of 3 percent in water rates for four person families using 50 gallons per person per day (Walton, 2017). In Atlanta, water rates increased 12 percent between 2010 and 2011 and between 2011 and 2012 (Walton, 2017). In Bakersfield, California, the city council approved a rate increase of 41 percent over the two years (Mills-Gregg, 2017)
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