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Water metering in Hobart-An appraisal of the cost-benefit study


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Kumar, A 1978 , 'Water metering in Hobart-An appraisal of the cost-benefit study', Honours thesis, University of Tasmania.

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Hobart is the only capital city in Australia where water is
supplied to the consumers unmetered. A flat rate is charged
annually in return for which consumers may take virtually unlimited
water. There seems to be a prevalent belief that water should not
be sold to the community of Hobart on the basis of consumption
because of the natural abundance of water in Tasmania. This view
is reflected in the 'requirements approach' used by the Metropolitan
Water Board in planning supply expansions. What is little realised
is that the source of Hobart's water (although virtually inexhaustible)
is situated a fairly great distance away from the metropolitan area.
Transporting water through pipelines over long distances is not a
cost-less affair and by virtue of this fact, water must be looked
upon and treated as an economic good.
This study has a three-fold objective. Firstly, it is to
examine the efficacy of the present investment criteria used by the
Metropolitan Water Board. The potential of the requirements approoch
to allocate society's resources efficiently is assessed. The price
variable is suggested as a means of exercising water demand
management and the second objective is to compare the efficiency of
a marginal cost pricing approach with the requirements approach in
tel~s of resource allocation.Finally, no matter how superior a marginal cost pricing policy
may be to the present flat-rate policy theoretically, it needs to be
proven that the costs involved in implementing such a scheme do not
outweigh the benefits. To this end, a cost-benefit analysis is
conducted to determine whether or-not universal metering should be
introduced in Hobart.The cost-benefit analysis implicitly compares the two alternatives
available to water authorities to meet demand after 1978/9 when the present supply is expected to reach full capacity.

Item Type: Thesis - Honours
Authors/Creators:Kumar, A
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