Effect Of Water Scarcity On Residential Property Prices

Project and Seminar Material for Environmental Science

Effect Of Water Scarcity On Residential Property Prices


Abstract


The purpose of this background paper has been to survey the literature bearing on various dimensions of water scarcity and economic growth, with an eye to the incorporation of future water shortage into a global CGE model such as the OECD’s ENV-Linkages model. The aim of this study is to determine the current patterns of behaviour as well as the potential of their residential sector in fostering sustainable water use in Nigeria. The primary source of data collected was mainly the use of a structured questionnaire which was designed to elicit information on the effect of water shortage on residential property prices. Data collected will be analyzed using frequency table, percentage and mean score analysis while the nonparametric statistical test (Chi-square) was used to test the formulated hypothesis using SPSS (statistical package for social sciences). The results show that the industrial sector can immensely contribute to sustainable development especially since it is well positioned to transfer sound practices and habits to the rest of the economy and in the process play a key role by functioning simultaneously as a means of minimizing and managing adverse impacts on the environment. This need arises because the industry, especially in the developing world, is rarely the repository of scarce technical skills for preservation and enhancement of the environmental resources while they continue to conduct their activities in a sector that has known severe impact on the natural resources and environment. The looming water crisis could actually become a growth opportunity, since reallocating water to higher value uses could bring significant aggregate benefits.


Chapter One


Introduction

Background Study

Pricing and regulatory strategies, when used as policy instruments to manage water resources, presuppose that all individual firms will follow the same behavioral pattern. However, there can be as much discussion and debate about whether firms respond mainly to self-interest, whether incentives are more effective than disincentives, and about the role of norms vis a viz government policies. In many cases none of the industrial firms may fit the image of an omniscient rational producer who attempts to optimize the benefits to costs of using an input. Firms may even be unaware of effluent standards or have no idea of the technological engineering and organizational prospects for upgrading their production system i.e. to use less water, abate wastewater treatment, or of the costs involved in responding to price and regulatory pressure (Braadraart, 1995: 449). In the absence of a general pattern of behaviour, only policy prescriptions unique to each firm would be desirable. On the other hand, in some cases, like the Porter hypothesis (1991), environmental (wastewater) regulation (and by implication – water pricing) has been mis-construed to imply a free lunch (or even “a paid lunch”), that is, regulation (and pricing) induce innovation or practices whose benefits exceed its costs, making regulation (and pricing) socially desirable, even ignoring the environmental (or resource use) problems it was designed to solve.


Significance of Study

The way in which the industries choose to exploit resources as well as provide the means of minimizing and managing adverse impacts on the environment will significantly alter the development process in any economy. Any short-term achievements of long-term sustainable goals must therefore be preceded by a critical focus on the activities of the industrial sector. This need arises because the industrial sector can immensely contribute to sustainable development especially since it is well positioned to transfer sound practices and habits to the rest of the economy and in the process play a key role by functioning simultaneously as a major engine of development and as a means to improving the national environment. However, the industrial sector, especially in the developing world is rarely the repository of scarce technical skills for preservation and enhancement of the environmental resources while they continue to conduct their activities in a sector that has known severe impact on the natural resources and environment. This adverse phenomenon is compounded by the fact that little is currently known about the effect of policies on practices of the residencies in general with regard to natural resource exploitation issues. In order to determine the current patterns of behaviour as well as the potential of their residential sector in fostering sustainable water use in Nigeria, a policy response study is proposed


Aim and Objectives

This study presents two main objectives to be fulfilled. They are interrelated to each other; each of them tries to specifically address at least one of our main research theme(s) that revolve around firm response to water tariffs and wastewater regulation, and the institutional environment for the enforcement of the instruments. The goal includes not only an understanding of the processes governing the firm behavior, but also the institutional context for the enforcement of the policy instruments. These objectives are listed below.

  1. Examine the current sourcing, water use, and effluent disposal by the industries and how this practice is linked to the water tariffs and wastewater regulation.
  2. Demonstrate the effectiveness of the policy instruments by analysing the role of the institutional setting in the enforcement of water tariffs and waste-water regulation.

Chapter Five


Conclusion and Recommendations

The purpose of this background paper has been to survey the literature bearing on various dimensions of water scarcity and economic growth, with an eye to the incorporation of future water scarcity into a global CGE model such as the OECD’s ENV-Linkages model. The evidence that links water scarcity to a slow-down of the long term rate of national economic growth is still relatively scarce. At local scale, water shortages can have a devastating impact – particularly in the near term, with power outages, retirement of irrigated crop land and unemployment. These localised impacts suggest the need for greater disaggregation than is usually the case in global CGE models. The minimum relevant scale would appear to be the river basin. Implementation of a global CGE model with water demand and supply fleshed out at the level of river basins will be a significant undertaking. However, some progress has been made in this regard (Liu et al., 2014) and there is a great deal of existing data and modelling work outside the CGE community which can form the foundation for such studies (e.g., Rosegrant et al. 2013). As society looks ahead to a world of increasing water scarcity, a key factor will be the scope for society to conserve water:

  1. By increasing efficiency in existing uses (e.g. water-efficient appliances),
  2. By substituting away from water intensive production activities (e.g., shifting from irrigated to rainfed cropping) and
  3. By substituting away from water intensive consumption goods and services (e.g., green lawns).

The overall capacity of the economy to substitute increasingly abundant physical and human capital for scarce water, is captured by the elasticity of substitution between these two inputs, s . If technology and preferences result in a value of 1 , then as water becomes more scarce, the associated economic rents will claim a larger and larger share of GDP. Eventually this could become a significant drag on the economy. In the literature review provided here, it appears that, at the level of individual sectors, this relatively inelastic response to water scarcity is indeed prevalent. However, it remains to be seen what scope there is for the economy to substitute more aggressively away from water intensive activities and consumption goods. Quantifying this potential should be part of the research agenda undertaken with the kind of global CGE model discussed in this report. Having flagged the potential for water scarcity to become a brake on economic growth, it should also be pointed out that water use is by no means destined to grow in proportion to population and/or output. Indeed, in reviewing the literature on water demand, the ample opportunities for conserving water across the board are striking, including in the electric power sector, the production of industrial steam, residential consumption, and irrigated agriculture. In our opinion, the main reason why such substitution has not been more widespread to date is due to the absence of economic incentives for conservation. In many uses around the world, water remains virtually free. And where a pricing structure does exist, it varies widely across sectors. Indeed, one could argue that the inter-sectoral price differential for water (100x in some places) represents one of the most extreme misallocations of a resource in the world economy today. The presence of this large inter-sectoral distortion heightens the need for general equilibrium analysis. Not only does the CGE approach offer estimates of the direct gains from reducing this distortion, but it also captures how this distortion interacts with other shocks to the economy. Indeed, it is entirely possible that, in a world of increasing water scarcity, water surplus regions could suffer efficiency losses as a result of the interplay between these distortions and international price changes. The presence of these large factor market distortions is a tribute to the power of the vested interests which control existing water rights. And their resilience over time is evidence of significant political power. However, as water scarcity becomes more severe, it is possible that these vested interests will be overtaken by the broader national interest, and a more economically efficient allocation of water will emerge. In this sense, the looming water crisis could actually become a growth opportunity, since reallocating water to higher value uses could bring significant aggregate benefits.


Get Complete Project Material

5,000 5000

The Complete Material Will Be Sent to You in Just 2 Steps

Quick & Simple…


Step One Purchase

Make Payment (Through Transfer) of ₦5,000 to Any of the Account Below

Access Bank PlcAcc No: 0811003731
Samphina Academy
Current Account
Zenith BankAcc No: 1225513212
Samphina Academy
Current Account

Or CLICK HERE To Pay With Debit Card


FOR STUDENTS OUTSIDE NIGERIA
CLICK HERE To Purchase Material ($15)
FOR GHANIAN STUDENTS
Make Payment of 120 GHS to 0553978005 | Douglas Cloud Osabutey | MTN MoMo

Step Two Purchase

Send the Following Details on WhatsApp ( 08143831497) After Payment

  1. Payment Details

  2. TOPIC: Effect Of Water Scarcity On Residential Property Prices

The Complete Material Will Be Sent To You On WhatsApp After Receiving Your Details
T & C Apply


  Contact Our Help Desk


Need a Different Topic? Perform a Quick Search



List of Related Works

Click on Any Topic to Preview the Content

samphina.academy

Samphina Academy

Samphina Academy is an Online Educational Resource Center that is aimed at providing students with quality information and materials to aid them in succeeding in their academic pursuit.