Throughout the United States, water management has been approached primarily as an engineering problem, rather than an economic one. Water supply managers are reluctant to use price increases as water conservation tools, instead relying on non-price demand management techniques, such as requirements for the adoption of specific technologies and restrictions on particular uses. In my March 3 post, "As Reservoirs Fall, Prices Should Rise," I wrote about how -- in principle -- price can be used by water managers as an effective and efficient instrument to manage this scarce resource. In a white paper, "Managing Water Demand: Price vs. Non-Price …
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Robert N. Stavins is the Albert Pratt Professor of Business and Government, Director of the Harvard Environmental Economics Program, and Chairman of the Environment and Natural Resources Faculty Group at Harvard University's John F. Kennedy School of Government.