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Tradeoff between Economies of Size in Treatment and Diseconomies of Distribution for Rural Water Systems

Published online by Cambridge University Press:  15 September 2016

Richard N. Boisvert  and
Todd M. Schmit
Richard N. Boisvert
Affiliation:
Department of Agricultural, Resource, and Managerial Economics, Cornell University, Ithaca, N.Y.
Todd M. Schmit
Affiliation:
Department of Agricultural, Resource, and Managerial Economics, Cornell University, Ithaca, N.Y.
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Abstract

This paper outlines a method to determine the tradeoff between economies of size in water treatment and diseconomies of distribution. Cost equations are estimated for several treatment technologies and distribution extensions. Empirical results are used to identify optimal system size where average total costs are minimized. Regardless of treatment, most costs are due to distribution. As water systems expand service territories, only in the most densely populated areas would remaining economies of size in treatment outweigh the diseconomies in distribution.

Type
Articles
Information
Agricultural and Resource Economics Review , Volume 26 , Issue 2 , October 1997 , pp. 237 - 246
Copyright
Copyright © 1997 Northeastern Agricultural and Resource Economics Association 

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