Abstract
Many water authorities use water restrictions as a method for rationing water during a drought. Water restrictions impose an economic cost on the community consisting of a loss of consumer surplus and a loss of producer surplus to the water authority. A general expression is developed for the economic cost of stringent time restrictions on outdoor water use. Particular examples of this are developed for the case of households with linear demand functions and households with demand functions of constant elasticity. It is shown that the economic cost of stringent time restrictions is greater than that for an equivalent price increase. The difference is due to variations in the demand curves between households and variations in the responses of individual households to water restrictions.
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