1. It may be boring but can it help?
Figure 2
colin green, Flood Hazard Research Centre, Middlesex University
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2. What is economics? The application of reason to choice
To make ‘better’ choices
To be more successful in implementing those decisions
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3. Economics and water management
Economies of scale
Why do we have to choose?
What might we mean by a ‘better’ choice?
Charging for water
Why metering is usually inefficient and dangerous
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4. fhrc Total cost Total number of properties in the area
Cost of providing piped water supply or sewerage
Digging a well or cesspit
Figure 2
Total number of properties in the area
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5. Why do we have to choose? Choice = conflict + uncertainty
If all are agreed as to which is the best option, then the choice has been made
There have to be at least two mutually exclusive alternatives
Figure 2
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6. fhrc

7. “I don’t know what to do”
An inability to differentiate - between courses of action
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8. I don’t know what to do I don’t know what I can do
I don’t know what will be the consequences of adopting each course of action
I cannot choose between them
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9. Knowledge about the world
Perfect knowledge
No knowledge
Knowledge about the world
Perfect confidence
Decision certainty
Figure 2
Starting point
Complete uncertainty
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10. The dimensions of choice
who
The dimensions of choice
Figure 2
when
how
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11. Choice is always prospective
Trying to choose the future
Future = change and uncertainty
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12. Making ‘better’ choices
What do we mean by ‘better’?
Making the ‘right’ choice - just and correct
Just - both outcome equity and procedural equity
Equity = moral principle consistently applied
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13. How might reason help us?
Understanding
Simplification
Communication
Address sources of conflict
Confront uncertainties
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14. Stages in project appraisal
Define problem, determine the objectives
Stages in project appraisal
Determine impacts of each option
Invent options
Identify the critical parameters that will influence the choice between the options
SENSITIVITY ANALYSIS
Eliminate unreasonable options
Compare benefits and costs of each option against a baseline
Identify the ‘best’ option
Test the robustness of the choice
Select the preferred option
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15. Charging for water Financing provision in the first place
Keeping the system operating
Allocating or sharing a scarce resource
Moral principle(s)
Changing people’s behaviour
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16. Value to A
Value to B
Figure 2
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17. Value to A
Value to B
Figure 2
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18. Marginal value
Marginal cost
quantity
price
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19. Marginal value
Marginal cost
quantity Q
price P
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20. Marginal value
Marginal cost
quantity
All externalities
price
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21. Marginal value
Marginal cost
quantity
All externalities
price
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22. quantity price fhrc Marginal value in use B Marginal cost
Externalities associated with use B
price
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23. Marginal value for uses A and B
Marginal cost
quantity
price
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24. quantity Q price fhrc All to A Marginal value net of externalities
Marginal cost
quantity
All to A Q
price
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25. quantity Quantity available price fhrc
Marginal value net of externalities
Marginal cost
quantity
Quantity available
price
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26. quantity price fhrc pa pb Real marginal cost of use B
Quantity available
Real marginal cost of use B pb pa
price
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27. UK: efficiency of water use in the textile industry
Figure 2
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28. North Carolina: water use efficiency in the textile industry
Figure 2
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29. North Carolina: water use in food processing
Figure 2
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30. Figure 2
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31. Determinants of domestic water demand
cultural
technology
demographics
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32. Determinants of domestic water demand
income
price
cultural
technology
demographics
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33. Figure 2
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34. Figure 2
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35. fhrc reduction in demand (litres/day)
One person household
Two person household
Three person household
Four person household
reduction in demand (litres/day)
If metering is very effective in reducing demand
Equivalent water cost of metering
% by which metering reduces demand
Figure 15-1 The economics of metering
quantity used (litres/day)
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36. fhrc reduction in demand (litres/day)
One person household
Two person household
Three person household
Four person household
reduction in demand (litres/day)
If metering is very effective in reducing demand
Equivalent water cost of metering
% by which metering reduces demand
Figure 15-1 The economics of metering
quantity used (litres/day)
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37. fhrc reduction in demand (litres/day)
One person household
Two person household
Three person household
Four person household
reduction in demand (litres/day)
If metering is very effective in reducing demand
Equivalent water cost of metering
% by which metering reduces demand
Figure 15-1 The economics of metering
quantity used (litres/day)
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38. fhrc Figure 15-2 Behavioural and technical price elasticities
marginalcost2.xls
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39. fhrc Figure 15-2 Behavioural and technical price elasticities
marginalcost2.xls
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40. fhrc

41. Integrating integrated catchment management Coastal zone management
Groundwater management
Emergency management
Energy policy
Transport policy
Urban and rural development
All media pollution control
Catchment
management
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