Project Team: Elizabeth Mack, PI – Michigan State University
Jessica Bolson – University of Pennsylvania
Gary Pivo – University of Arizona
David Hondula – Arizona State University
This project evaluates the economic impacts of water price increases on household income, regional income, and regional employment. Impacts on business output will also be estimated. This is important to consider given pressures on urban water systems such as aging infrastructure, growing populations, and climate change. These pressures mean that water costs will rise and place economic strains on businesses and households. From the business side, higher water costs could lead to increases in prices of inputs and salaries, and a lower willingness (and ability to pay) for business outputs by households. This strain on business outputs means that businesses may have to hire fewer workers. This reduction in the number of persons employed, increases the incidence of unemployment in households and reduces household income. Due to this reduction in household income, people will purchase fewer goods and services from businesses, which further reduces firm profits. In other words, there is a vicious cycle between many elements of water: water supply, water demand, water prices, business income, and household income.
This means that rising water prices are a sign not only of an environmental problem, but an economic problem. Environmental and economic water issues are interrelated, and have spillover effects. What further complicates this vicious cycle is the concentration of these impacts in people and households The downside of this duality is likely strongest for low-income households who likely use the least amount of water and also pay a larger proportion of their income for water than do high income households. The figure below highlights that key actors (including households, businesses, and government) interacting within the environment cyclically impact water supply and water prices, as well as one another. Government plays a role in this system of impacts through its levels of taxation on businesses and households, but also, and perhaps, most importantly in the context of water, in its attempts to regulate water use through water use restrictions.
Water use is often thought of primarily from an environmental point of view. Economic impacts are ignored, and this is particularly the case for low-income and disadvantaged households who have perhaps more fixed demands for water than do high-income consumers who demand is more flexible or elastic for water given the numerous ways in which they use water in their households (pools, hot tubs, watering lawns, etc.). This is distinct from low-income households who do not have pools and hot tubs to fill and perhaps even lawns to water. Their uses of water are more necessity oriented. From a water management standpoint then, the ways in which water use can be reduced, from a price perspective and also from a regulatory standpoint merit evaluation, especially from an equity standpoint. This is because market mechanisms for reducing water use via price are likely to disproportionately impact low-income households who will need to dedicate a larger proportion of household income to pay for water than will middle and high income households. Given this range of issues, the outcomes for this project seeks to provide information and educate a diverse range of individuals including households, stakeholders, and grassroots organizations about the pressures (demographic change, population growth, urbanization) behind increased water demand and water consumption as indicated by indicators such as water use per capita, water cost indices, and an empirical assessment of the impacts associated with water price increases. It will also use this information to work with these groups to construct water use regulation strategies that have more of an impact on regulating water use but also less disparate impacts on vulnerable, low-income households.
"""Mwanzoni mwa mwaka huu, Chuo Kikuu cha Jimbo la Michigan, Jessica Bolson, Chuo Kikuu cha Pennsylvania, Gary Pivot, Chuo Kikuu cha Arizona, David Hondula, na Chuo Kikuu cha Arizona, walijaribu kuunda mfumo wa uchumi wa maji kwa ajili ya kuimarisha uchumi wa nchi." Athari juu ya uzalishaji wa biashara pia itakadiriwa. Hii ni muhimu kuzingatia shinikizo lililotolewa kwenye mifumo ya maji ya mijini kama vile miundombinu ya kuzeeka, idadi ya watu inayoongezeka, na mabadiliko ya hali ya hewa. Mkazo huu unamaanisha kuwa gharama za maji zitaongezeka na kuweka shinikizo la kiuchumi kwa biashara na kaya. Kwa upande wa biashara, gharama za juu za maji zinaweza kusababisha ongezeko la bei ya viingilio na mishahara, na nia ya chini (na uwezo wa kulipa) kwa bidhaa za biashara na kaya. Mkazo huu juu ya pato la biashara unamaanisha kwamba biashara zinaweza kuhitaji kuajiri wafanyakazi wachache. Kupungua kwa idadi ya watu walioajiriwa, huongeza visa vya ukosefu wa kazi katika kaya na hupunguza mapato ya kaya. Kwa sababu ya kupungua kwa mapato ya kaya, watu watanunua bidhaa na huduma chache kutoka kwa wafanyabiashara, ambayo hupunguza zaidi faida za kampuni. Kwa maneno mengine, kuna mzunguko mbaya kati ya vipengele vingi vya maji: usambazaji wa maji, mahitaji ya maji, bei ya maji, mapato ya biashara, na mapato ya kaya. Hii inamaanisha kuwa kuongezeka kwa bei ya maji ni ishara sio tu ya tatizo la mazingira, lakini tatizo la kiuchumi. Masuala ya mazingira na kiuchumi ya maji yanahusiana, na yana athari za kuenea. Kwa upande mwingine, athari za maji ni kubwa kwa watu na nyumba, na athari za maji ni kubwa kwa familia zenye mapato ya chini, ambazo hutumia maji kidogo na kulipa sehemu kubwa ya mapato yao kwa ajili ya maji. Mchoro hapa chini unaonyesha kwamba watendaji muhimu (ikiwa ni pamoja na kaya, biashara, na serikali) wanaohusika katika mazingira huathiri usambazaji wa maji na bei ya maji, pamoja na kila mmoja. Serikali ina jukumu katika mfumo huu wa athari kupitia viwango vyake vya ushuru kwa biashara na kaya, lakini pia, na labda muhimu zaidi katika muktadha wa maji, katika majaribio yake ya kudhibiti matumizi ya maji kupitia vizuizi vya matumizi ya maji. Matumizi ya maji mara nyingi hufikiriwa hasa kutoka kwa mtazamo wa mazingira. Matokeo ya kiuchumi ni kupuuzwa, na hii ni hasa kesi kwa ajili ya nyumba za mapato ya chini na maskini ambao labda kuwa na mahitaji ya maji zaidi ya mahitaji ya maji kuliko watumiaji wa mapato ya juu ambao mahitaji ni kubadilika zaidi au elastic kwa ajili ya maji kutokana na njia nyingi ambazo wao kutumia maji katika nyumba zao (bwawa, hot tubs, maji lawns, nk). Hii ni tofauti na nyumba zenye mapato ya chini ambazo hazina vidimbwi na mabwawa ya maji moto ya kujaza na labda hata nyasi za maji. Matumizi yao ya maji yanategemea uhitaji zaidi. Kwa mtazamo wa usimamizi wa maji, basi, njia ambazo matumizi ya maji yanaweza kupunguzwa, kutoka kwa mtazamo wa bei na pia kutoka kwa mtazamo wa udhibiti, tathmini ya sifa, haswa kutoka kwa mtazamo wa usawa. Hii ni kwa sababu utaratibu wa soko wa kupunguza matumizi ya maji kupitia bei ya maji yaweza kuwa na athari kubwa kwa kaya zenye mapato ya chini ambazo zitahitaji kujitolea sehemu kubwa ya mapato ya kaya kulipa maji kuliko nyumba za kipato cha kati na cha juu. Kwa kuzingatia safu hii ya masuala, matokeo ya mradi huu yanatafuta kutoa habari na kuelimisha watu mbalimbali, ikiwa ni pamoja na kaya, wadau, na mashirika ya msingi, kuhusu shinikizo (mabadiliko ya idadi ya watu, ukuaji wa idadi ya watu, mijini) nyuma ya kuongezeka kwa mahitaji ya maji na matumizi ya maji, kama inavyoonyeshwa na viashiria kama vile matumizi ya maji kwa kila mtu, viashiria vya gharama ya maji, na tathmini ya athari zinazohusiana na ongezeko la bei ya maji. Pia itatumia habari hii kufanya kazi na vikundi hivi kujenga mikakati ya udhibiti wa matumizi ya maji ambayo ina athari kubwa juu ya udhibiti wa matumizi ya maji lakini pia athari ndogo za tofauti kwa kaya dhaifu, za mapato ya chini.