Community Water System Regionalization and Stakeholder Implications: Estimating Effects to Consumers and Purveyors (PREPRINT)
2011
Hansen, Jason K
The water resource literature documents the solution that community water system regionalization (CWSR) offers, based on economies of scale, to challenges small community water systems (CWSs) face born of financial distress. But in practice very few systems actually regionalize. Imposing a model based on economies of scale, this paper estimates stakeholder implications to consumers and water purveyors that could materialize if CWSR takes place. The analysis applies social welfare theory then, drawing upon the literature and with empirical analysis, estimates consumer surplus and CWS rents to ascertain consumer and purveyor effects. The paper applies the framework to four New Mexico communities and reports results based on expected outcomes within these areas. Results indicate that the magnitude of consumer effects (generally positive) and purveyor effects (also, generally positive) depend on the pricing scheme imposed post regionalization. The results will inform those interested practitioners in CWSR.
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