Pricing Sydney water

R. Quentin Grafton*, Tom Kompas

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    40 Citations (Scopus)


    The paper estimates an aggregate daily water demand for Sydney using rainfall, temperature, and price data from 2001 to 2005, and a dummy variable to account for reductions in demand following the introduction of water restrictions in October 2003. Analyses based on the estimated price elasticity, and also values one and two standard errors above and below this estimate, are used to model the effects of different pricing and water supply scenarios. The simulations indicate that without a fundamental change in water policy (pricing and supply) Sydney faces the possibility of critical water shortages in the short- to medium-term should there be a continuation of low rainfall events.

    Original languageEnglish
    Pages (from-to)227-241
    Number of pages15
    JournalAustralian Journal of Agricultural and Resource Economics
    Issue number3
    Publication statusPublished - Sept 2007


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