| Water is a vital commodity for the health and welfare of individuals, as well as for the business climate of a region. Dallas Water Utilities, an enterprise department within the City of Dallas, serves as a regional supplier of water to Dallas residents and many surrounding communities. In an effort to meet the long-term water needs of the region, the City authorized a series of studies which projected water requirements to the year 2060 and recommended major capital projects in order to ensure that the projected requirements are met. In this paper, Dallas' long range water supply needs will be reviewed, the methodology used in these studies will be evaluated, and alternatives will be explored and illustrated. Included in this review is an elementary microeconomic concept, the law of demand which simply states that as water rates increase, water consumption declines; as well as a focus on nonprice conservation measures. These variables have not been adequately addressed in the long range studies prepared for the City of Dallas. In this study, the price elasticity of demand for water for the City of Dallas is estimated, along with nonprice water conservation measures. Combined with estimates of population growth, the measures are used to provide alternative projections of future water demand and to show the changes in capital commitments that result, compared with those recommended using existing methodologies. Capital projects recommended to meet estimated water requirements may be delayed or reduced in scale if water conservation measures are taken into account for long-range water supply planning. This study found that for the residential customers within the City of Dallas, the price variable was not statistically significant impact on per capita water consumption---likely due to the relatively small real price changes. The income variable was also not statistically significant. The study further shows that precipitation, temperature, and nonprice conservation measures were statistically significant for residential customers. Complete results are shown in Chapter 6. |
