This paper aims to conduct a literature review of the article “Efficiency and Equity in Natural Resources Pricing: A Proposal for Urban Water Distribution Service” by Maria A. García-valiñas (2005). Then focus of the article is on the design of optimal prices for water distribution in urban centers. The problem or the main issue in the article will be the first element to be discussed in this review. This will then be followed by a brief breakdown of the methodology and the data used in the study. The main findings and conclusions made by the author of the article will then be explained. The next section will involve a discussion of various articles that have cited this article and the particular information form the article that they have utilized. The final section of this article review will comprise of an evaluation of the significance, usefulness and readability of the article as well as a comment on its style of writing.
Water is a natural resource that is sometimes not available to everybody. In urban centers particularly, residents have to rely on local councils to distribute this natural resource but the pricing of this precious commodity has often elicited intensive debates. Some council have been accused on exploiting poor urban residents in spite of the fact that water is a natural resource that is supposed to be enjoyed by all. This article addresses this problem by focusing on strategies that can be used to design optimal prices when it comes to water distribution services in urban centers.
The article uses theoretical frameworks developed by Feldstein (1972) and Ramsey (1927) to come up with optimal tariffs of prices for this vital natural resource. Estimations of the demands of water in urban centers are first conducted. Data on water costs is also collected. This data is collected from the Spanish town of Seville. After the collection of this data, an empirical comparison in terms of welfare is conducted between the newly proposed tariffs and those that are applicable or practical in the year of 2000.
The main conclusion from this article is that it is possible water distribution service providers in urban centers that ensure fairness and at the same bring profit. In simple terms, water distribution tariffs should be designed in such a manner that they do not constrain on customers but at the same time bring adequate profit.
The article has been cited in other articles whose subject is water economics. One such article is. "Welfare and distribution effects of water pricing policies" by Ruijs (2009) where the concept of society’s welfare in the determination of water tariffs and pricing is cited. Rujis quotes the article stating that water pricing should not be all about profits and exploitation. Another article which quotes elements of the article under review is "Residential water use: efficiency, affordability, and price elasticity” by Hung and Chie (2013). Here, the authors argue against the some of the tariffs presented by Maria A. García-valiñas stating that low prices in water may result in water being used inefficiently.
This article is of great relevance especially in regards to urban settings. The article shows how equity and efficiency should be incorporated in the dissemination of natural resources in the society. Simple clear and conscious language is used throughout the article, therefore ensuring its readability.Acknowledgment
I wish to acknowledge that this paper has been completed solely by me without the use of any outside help.
Garcia-Valiñas, Maria A. "Efficiency and equity in natural resources pricing: a proposal for urban water distribution service." Environmental and Resource Economics 32.2 (2005): 183-204.
Hung, Ming-Feng, and Bin-Tzong Chie. "Residential water use: efficiency, affordability, and price elasticity." Water resources management 27.1 (2013): 275-291.
Monteiro, Henrique. Residential water demand in portugal: checking for efficiency-based justifications for increasing block tariffs. No. ercwp0110. ISCTE-IUL, Business Research Unit (BRU-IUL), 2010.
Ruijs, Arjan. "Welfare and distribution effects of water pricing policies." Environmental and Resource Economics 43.2 (2009): 161-182.