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TITLE: Is Water Policy Limiting Residential Growth? Evidence from California AUTHOR: Ellen Hanak PAGES: 38 DATE: October 2006 ABSTRACT: Rapid population growth and increasing costs of new water have led state and local governments throughout the American West to condition residential development on long-term water availability. Using original survey data, this paper examines the effects of water screening policies on California’s housing supply from 1994 to 2003. Fixed- and random-effects panel regressions indicate that these policies significantly slowed growth. However, impact fees based on the costs of residential water connections do not have this effect and may constitute a preferred policy. To enhance the social efficiency of screening policies, regulators may need to encourage the adoption of conservation-oriented water rates, which are associated with significant savings in residential water use. PPIC working papers present work in progress and may not be quoted or cited without permission of the author. Comments or suggestions, however, are welcome. |