water resource economics

Water Resource Economics

Spring 2024

25 points

(2-3 typed pages including tables/figures)

A vigorous debate rages over which of two potential urban water supply programs is an economically better way to supply safe affordable drinking water to residents of a large poor city. The high points of each program are:

• Program 1: Supply a minority of the population with cheap piped‐in water by delivering 10,000 acre feet per year of utility supplied water from a central delivery system, at a price equal to the average cost of supply, $300/ac‐ft. The remainder of water must be bought from street vendors described, for example, at https://www.wiego.org/informal-economy/occupational-groups/street-vendorsLinks to an external site. at a price of $900 / ac‐ft.
• Program 2: Supply the entire population by meeting all demands at a constant price.  This program would build and use a shiny new engineered central delivery system that supplies water at a constant price equal to the average cost of supply.  That price is $600 / per acre foot, charged to all buyers, for which total use is 70,000 ac-ft.

Your task is to compare Total Annual Economic Benefits (TAEB = CS + TR – TC) of each program by ranking the economic performance of each from the view of the city’s water buyers/suppliers.   You can use these abbreviations:

CS = consumer surplus   = willingness to pay minus actual payments          calculated for each program

TR = total revenue           = price x quantity                                                    calculated for each program

TC = total cost                 = average cost x quantity                                        calculated for each program

I will show you more about these terms in our class slides this week, letting you see a down-sloping water demand function for which the maximum price of water (y intercept) is $1650 per ac‐ft.

Q 1 (15 points) Calculate the Total Annual Economic Benefits (TAEB) to the city’s water stakeholders for each program and show calculations.

Q 2 (10 points). You have been hired as an expert consultant, and will snag a juicy consulting fee if you recommend the right choice. Describe your recommended choice and explain why you would make it.

This week you will create an annotated bibliography for the Art Appreciation Project you began working on in Week 4. In addition to the source you identified in the Week 4 Art Appreciation Project Outline, you will find four additional scholarly or academic sources for a total of five. These sources will be the building blocks for your presentation, so be sure to spend time searching for sources, reading critically, and evaluating the relevance of each source.

For each source, provide the following.

• The APA style reference
• A one-paragraph summary of the relevant sections of the article written in your own words
• A one-paragraph assessment of its overall quality and relevance to your presentation topic

To help make sure your document is properly formatted and meets all assignment requirements, please refer to the Assignment Connection in this week's lesson.

In an effort to improve your success in this course, you have the opportunity to resubmit your response to this assignment for a better grade if you show proof of Tutor.com usage within a week after you original grade is posted. Tutor.com is an online tutoring service that provides 24/7 assistance to you, at no additional cost. You can access Tutor.com in the course menu at the left hand side of your screen

Respond to the following in a minimum of 175 words and use at least one source (this includes a citation in the narrative and an APA formatted source):

• Do you think organizations differ from each other when placing importance on areas of the SWOT analysis?
• Describe a real-world example of an organization that would place more importance on one area of the SWOT analysis compared to another area.

Price controls, such as one proposed on rents in Sanford in 2023 (see attached article), are an effort to impose a social value (affordable housing) on owners of apartments and houses. They often do no work as intended as the Nobel Laureate Milton Friedman noted with his pithy statement of “Roofs or Ceilings:”

Rent ceilings, therefore, cause haphazard and arbitrary allocation of space, inefficient use of space, retardation of new construction and indefinite continuance of rent ceilings, or subsidization of new construction and a future depression in residential building. Formal rationing by public authority would probably make matters still worse. https://fee.org/resources/roofs-or-ceilings-the-current-housing-problem/

If you could impose a price ceiling, name a good or service that you would like to see a ceiling (or floor) placed on and explain with a justification (do not use a good that another student has mentioned). Would there be any negative consequences? Draw a supply and demand curve (upload/attach a photo or drawing) illustrating the equilibrium price and where you would place your ceiling (or floor).