@article{Hughes:6005,
      recid = {6005},
      author = {Hughes, Neal and Hafi, Ahmed and Goesch, Tim and  Brownlowe, Nathan},
      title = {Urban water management: optimal price and investment  policy under uncertainty},
      address = {2008},
      number = {419-2016-26602},
      series = {Conference Paper},
      pages = {24},
      year = {2008},
      abstract = {Australian urban water utilities face a significant  challenge in designing
appropriate demand management and  supply augmentation policies in the
presence of increasing  water scarcity and uncertainty over future dam  inflows.
This paper considers the design of optimal demand  management and supply
augmentation policies for urban  water. In particular, scarcity pricing is considered
as a  potential alternative to the predominant demand management  policy of water
restrictions.
A stochastic dynamic  programming model of an urban water market is  developed
based on data from the Australian Capital  Territory. The model involves an explicit
consideration of  uncertainty via a probability distribution over dam  inflows. Given
a specification of the demand and supply for  urban water, state dependent optimal
price and investment  policies are estimated. The results illustrate how the  optimal
urban water price varies inversely with the  prevailing storage level and how the
optimal timing of  investment differs significantly between rain dependent and  rain
independent augmentation options.},
      url = {http://ageconsearch.umn.edu/record/6005},
      doi = {https://doi.org/10.22004/ag.econ.6005},
}