Water Pricing

Guest: Ariel Dinar, Ph.D., Professor of Environmental Economics and Policy at the University of California, Riverside, and co-author of Water Pricing Experiences and Innovations.  The US Drought Monitor has a map right on the front page of its website showing the relative dryness of the nation on any given day. At the moment – and as it has been for several years now - there’s a deep red gash covering much of California, with rings of orange, brown and yellow emanating, as if from an epicenter. Red signifies exceptional or extreme drought – those are two separate categories of parched. Orange and tan mean severe and moderate. Yellow means abnormally dry. The entire Western United states is encircled in this visual ring of fire.  A combination of changing climate factors and booming population over a period of decades has brought a water crisis to the region. California Governor Jerry Brown has ordered a 25% reduction in water use for his state.  That’s one way to go about conserving water: Ask people to use less and threaten them with fines if they don’t. Another possibility is to give people an incentive to conserve without being forced.