Who pays for water scarcity? Evaluating the welfare implications of water infrastructure investments for cities

  • Hua Zhong
  • Michael H. TaylorEmail author
  • Kimberly S. Rollins
  • Dale T. Manning
  • Christopher G. Goemans
Original Paper


Continued provision of low-cost municipal and industrial water is anticipated to be a challenge for cities in the coming decades. To address this, many are considering large-scale infrastructure projects to expand their water supply. In this article, we develop a general equilibrium model to evaluate the economy-wide distributional impacts of water infrastructure projects. The model framework includes a regulated water utility with a cost-recovery mandate and captures the trade-off between the immediate costs of financing infrastructure projects and the long-term costs that water scarcity imposes on the regional economy. We apply the model to an on-going water infrastructure project in Las Vegas, Nevada.

JEL Classification

R13 L95 Q25 



This research was funded by the USDA Agriculture and Food Research Initiative (AFRI) through the grant “Rural to Urban Water Transfers, Climate Change and the Future of Rural Agricultural Economics in the Semi-Arid West: A Comparative Regional Analysis” (Agreement #: 2015-67023-22987). We would like to thank Harvey Cutler, Thomas R. Harris, and Kevin H. Crofton for their invaluable guidance and assistance.

Supplementary material

168_2019_943_MOESM1_ESM.csv (24 kb)
Supplementary material 1 (CSV 23 kb)


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of Applied EconomicsBeihang UniversityBeijingChina
  2. 2.Department of Economics and Cooperative ExtensionUniversity of Nevada, RenoRenoUSA
  3. 3.Department of Agricultural and Resource EconomicsUniversity of ConnecticutStorrsUSA
  4. 4.Department of Agricultural and Resource EconomicsColorado State UniversityFort CollinsUSA

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