| Alleviating excess demand for water is a reoccurring issue in California. An analytical framework is developed to examine the different ways to eliminate excess demand for water in California. Four ways are examined in the marshallian cross framework. First, shifting the supply schedule to the right. Second, shifting the demand schedule to the left. Third, increasing the price of water to the equilibrium point. Fourth, closing the excess demand gap by administratively rationing the quantity of water consumed. The role of institutions in determining the price of water and building infrastructure to increase the stock of water is examined An analysis of household water consumption behavior during the drought of 1987-91 reveals that households voluntarily... |
