Grafton, R Quentin; Chu, Hoang Long; Kompas, Thomas; Ward, Michael
We evaluate the welfare losses of undertaking water supply augmentation in Sydney, Australia with a fixed, regulated water price given weather variability. Stochastic dynamic programming is used to determine dynamically efficient water prices and to estimate the losses in social surplus from premature water supply augmentation. Results show that premature water supply augmentation under the base case reduces the net present value of the welfare of households by more than $A 3 billion, or some...[Show more]
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