Pricing water in dry years
Water scarcity, irrigation and groundwater appear on 72 recent papers, with 21 in the last quarter against about 16 expected, but water pricing itself on only 4. Droughts are forcing cities and farm districts to ration water. Would prices ration it better, and who would pay?
What prompted this
Since October 2025, 72 papers carry a water-scarcity, water-pricing, irrigation, groundwater or water-use keyword (44 in economics journals, 17 in AI): "water scarcity" on 22, "irrigation" on 6, "groundwater pumping" on 5, "water pricing" on 4, "household water use" on 4. The quarter to September 2026 had 21 such papers against about 16 expected. The AI papers mostly forecast groundwater levels; the economics of allocating water is thin.
Questions
- When cities raised water prices in droughts (Cape Town, California, Spain), how much did use fall, and how did the burden split between rich and poor households?
- Do water markets among farmers (Australia's Murray–Darling, California) move water to higher-value crops, and what happens to farm communities that sell?
- Does free or cheap electricity for pumps drive groundwater depletion, as in India, and would metering change it?
Data that could help
Household billing data around tariff changes, water market trade records, groundwater level monitoring and electricity use by farm pumps.
Next step
Estimate the price elasticity of residential water demand by income group from billing data around a drought-time tariff increase.