WATER: Abare paper, ‘Urban water management: optimal price and investment policy under climate variability’

Given the increasing scarcity of urban water and the potential for climate change to further reduce water availability and increase variability, there is increased pressure on urban water utilities to implement efficient demand management policies and to make optimal supply augmentation decisions. Currently, urban water demand management predominantly involves the imposition of water restrictions to ration water during times of scarcity. In this Abare paper, scarcity pricing is proposed as an alternative to the use of water restrictions.