Price Policy and Land Value Taxation For Urban Water Supplies*

Abstract

WITHIN THE NEXT TEN TO TWENTY-FIVE YEARS urban water supply will become the focus of many important and controversial problems. These emerging policy issues are likely to develop on three fronts: technology, economics, and political decision-making. All of this will represent a rather sharp contrast with the present status of urban water policy which has been relatively neglected by economists, public officials, and city planners. In the past there were few pressing questions of technology, economics, or of political judgment to warrant more than cursory attention to municipal water supply compared to other functional questions on the urban policy agenda. If I am correct, this rather calm and placid appearance will soon be subject to some rather radical changes. Before going further I should emphasize that urban water supply, in itself, is not likely to become the most important urban problem. Even though urban water problems will become much more important than they have been in the past, the scale of investment needed to satisfy growing urban demands will continue to be dwarfed by the funds devoted to urban transport construction and to urban renewal. Furthermore, the ever-present problems of urban land-use planning will always be more complex than those of urban water planning. However, when questions of urban water supply are viewed in a larger context, as they should be, it is evident that the decisions made in regard to water supply can condition the direction and the pattern of city growth. There are many close ties between planning for future city growth and the provision of new water facilities. Water investment, water taxation, and water pricing policies, for example, may exhibit a strong decentralization bias and thus influence the demands for land and for transportation facilities at city perimeters and thereby offset, at least in