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California Water Pricing Case Solution & Answer

This Case is about FINANCIAL MANAGEMENT, FINANCIAL MARKETS, POLICY, SUSTAINABILITY

PUBLICATION DATE: January 01, 1986 PRODUCT #: HKS537-PDF-ENG

In many parts of California, costs were set by water districts so that agricultural users pay much less than residential users in relation to the true price of plain water. The adoption of a marginal cost pricing system would necessarily create losers as well as winners, and it would also bring tremendous efficiency increases. To expect the issues of executing this type of pricing system in California, reformers have to expect which harvests in California would be most impacted. The case makes available the info required to do a partial equilibrium prevalence investigation, including data on the typical factor share of water by harvest, the average value created for every harvest by borderline uses of water, the amount of area variation in the proportion of non-water inputs, as well as the function of every harvest in the California and world-wide marketplace. HKS Case Number 710.0

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